(J 


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University  of  California. 


OF 


A  RESOURCE  OF  WAR— THE  CREDIT  OF  THE  GOVERNMENT 
MADE  IMMEDIATELY  AVAILABLE. 


HISTORY 


LEGAL  TENDER  PAPER  MONEY 


li-SL'El)  DURING  THE 


GREAT  REBELLION. 


toitbout  J[n!trc9i  anb  ;i  Rational 


PREPARED  BY 


Hon.  E.  G.  SPA  ULDING,  Chairman. 


THE   SUB-COMMITTEE  OF  WAYS  ASD  MEANS.  AT  THE   TIME 
THE  ACT  WAS  PASSED. 


In  such  a  nation  as  this,  there  is  one  and  only  one  RE&OUKCE  for  loans  &.  ificient  to  carry 
hrongh  the  expenses  of  a  GREAT  WAR,  namely,  fundable  Treasury  Notes  fitted  for  circulation 
as  money,  and  based  upon  adequate  taxation. 

"  That  in  the  interval  between  war  and  war,  all  the  outstanding  paper  should  be  called  in 
coin  permitted  to  flow  in  again,  and  hold  the  field  of  circulation,  until  another  war  should  re 
quire  its  yielding  place  again  to  the  NATIONAL  MEDIUM.'' — JEFFERSOX. 


I  U  F  F  A  L  O 

EXPRESS  PRINTING  COMPANY,  14  EAST  SWAN  STREET. 

1869. 


INDEX. 


PAOB 

Introduction,       -       -       -    ,   -     -  -       -     .  -       -       -       -       -       -      5 

No  National  Currency  at  commencement  of  War,      -       -       -  .     -         5 
War  carried  on  upon  credit  and  taxation,        ------      5 

Legal  Tender  act  a  War  measure,         -       -       -       -       -       -       -  5—29 

Loan  of  $150,000,000  by  the  Associated  Banks,        -       -       -       -     .  -T     fr 

Who  composed  the  Committee  of  Ways  and  Means,    -       -       -       -         7 

Sub-Committee,  Messrs.  Spaulding,  Hooper  and  Corning,  8 

Secretary  Chase's  financial  plan,  a  bank  and  taxation,        -  8 — 11 

Mr.  Chase  does  not  recommend  legal  tender. 10 

Bank  bill  prepared  by  Mr.  Spaulding,   -       -       -       -       -  11—12 

Erastus  Coming's  letter  on  the  Bank  bill,       -       -       -       -       -       -     12 

Origin  of  the  Legal  Tender  act,     -       -       -       -       -       -.'-.-        13 

Legal  Tender  bill  introduced  by  Mr.  Spaulding,      -       -       -       -       -    14 

Ways  and  Means  divided  on  the  bill, -        15 

Opinion  of  Attorney  General  Bates,  -    15 

Ways  and  Means  agree  to  report  the  bill,     -       -       -       -       -       -       16 

Bill  reported  by  Mr.  Spaulding,        -       -       -       -       ...       -    16 

Mr.  Spaulding's  letter  to  Isaac  Sherman.  New  York.          -       -       -       17 

Isaac  Sherman's  letter,       .       -       - 18 

The  Press  in  New  York  opposed  to  the  act,  19 

Meeting  of  Bank  Delegates  in  Washington  to  oppose  the  bill,       -        -    19 
Meeting  of  Delegates  and  Committees  at  Treasury  Department.       -       19 
Their  plan  to  raise  money  to  carry  on  the  War,      -  -<       -       -    20 

Secretary  Chase  modifies  their  plan,      -'-       -       --       --       21 

Opposition  to  the  Bank  plan,     -----*.       -       -       -    22 

Letters  of  M.  H.  Grinell,  L.  F.  Allen  and  Mr.  Gauson,       -       -       -       23 
Letters  of  J.  W.  Simonton,  T.  Denny  &  Co..  J.  E.  Williams,        -     24—25 
Section  for  $500,000, 000  of  5-20  bonds,    -------        26 

Letter  of  Secretary  Chase,  January  22,  1862,    -       -  .    -•       -       -       -    27 
National  Intelligencer,  Col.  Seaton,  etc.,      -  .     -   '    -        -  -        28 

Mr.  Spaulding's  opening  Speech  on  the  bill,    ------    28 

Value  of  the  Real  and  Personal  property,  $16,159,616,068.  -  41 

Mr.  Vallandigham  offers  a  substitute,       -       -       -       --       -       -43 

Mr.  Pendleton's  Speech  on  the  bill,       -       -       -       -       -       -       -       43 


iv 

Mr.  Coming's  resolution  asking  opinion  of  Secretary  Chase,  -  -  45 
Secretary  Chase's  opinion  of  the  propriety  and  necessity  of  the  bill,  45 
Mr.  Chase's  letter  to  Mr.  Spaulding,  Jan.  30th,  -  .  -  -  -  -  46 
Letters  of  John  A.  Stevens,  George  Opdyke  and  R.  Morris,  47 

Letters  of  Stephen  Colwell,  M.  S.  Hawley,  J.  H.  Van  Antwerp,  -  48—49 
Letters  of  Robert  Dennison.  C.  H.  Russell,  Mr.  Lord,  Mr.  Prosser,  40—50 
Letters  of  George  B.  Butler,  T.  W.  Olcott  and  others,  -  -  -  51—52 
Mr.  Vallandigham's  Speech,  -  --  *  .  -  -  -;•:.>:;-  52 
Mr.  Hooper's  Speech,  _-_-----_  54 — 55 
Mr.  Roscoe  Conkling,  Mr.  Morrill,  Stevens  and  Spaulding,  -  57 — 58 
Mr.  Conkling  as  to  Secretary  Chase's  position,  -  -  -  -  58—59 
Secretarjr  Chase's  letter  in  favor  of  bill,  V"-  •  ••»  -  59 

Mr.  Morrill's  Speech  against  legal  tender.  -  -  - >:'-  ••->;••  -  -  60 
Mr.  Roscoe  Conkling's  Speech  against  legal  tender,  64 

Mr.  Bingham,  of  Ohio,  in  favor  of  the  bill, 66 

Mr.  Sheffield,  Crisfield  and  Pike,   -       -       -  68—69 

Mr.  Alley,  of  Massachusetts,  in  favor  of  the  bill,     -       -"      -  .     -. -r    -    71 
Letter  of  Secretary  Chase  urging  immediate  action,    -       -       -       -       71 

Mr.'Spaulding's  motion  to  close  debate  opposed,    -       -       -  r.    ~-     -    72 
Mr.  Horton  and  Mr.  Wright  oppose  the  bill,  -  :  .  -   ..;..  -       73 

Order  to  close  debate  passed,    -       -       -       -       -       -     ,.-       -       -    74 

Proceedings  on  the  day  the  bill  passed  the  House,  -       -       75 

Mr.  Kellogg's  Speech,  "       "       "       -    75 

Mr.  Thomas  and  Mr.  Edward's  Speeches,     -       -       -       r  •    -       77 

Mr.  Riddle  and  Blake's  Speeches, -78 

Mr.  Campbell's  Speech,  -  -       79 

Mr.  Spaulding  and  Stevens'  Speeches  closing  debate,  .-       -     80—81 

Five  minute  Speeches  continued,  -       -       -       -       -       -       -       -       85 

Mr.  F.  A.  Conkling,  Shellabarger.  Hickman,  -  -       -       -     85—87 

Mr.  Lovejoy  and  Walton,       -       -       -       -       -  88—91 

Motion  to  strike  out  legal  tender  clause  lost,  -  -       -   .    -     91—92 

Confusion  and  excitement  on  taking  vote,  -  -  -  ,  "-•  „  .-..'•-  92 
The  substitute  of  Mr.  Morrill,  Conkling  and  others  lost,  -  92,  93,  94 
Bill  passed ;  yeas  93,  nays  54,  95—96 

Copy  of  bill  as  passed  the  House  February  6,  1862,  *  -  -  -  66—67 
George  Dawson's  letter  to  Albany  Journal,  -----  98 

Proceedings  in  Senate  on  the  bill,     -  99 — 100 

$10.000,000  demand  notes  for  temporary  relief, 99 

Senate  Finance  Committee  propose  amendments,  -----  100 

Mr.  Fessenden's  opening  Speech,  -       -       -       r     .  -  .     -  ':' '•:•*.  "i ;.  -      100 
Speeches  by  Judge  Coliamer  and  Mr.  Howe,  •  .  '  -       -  106—107 

Speeches  by  Chandler,  Wilson  and  Sherman,,      -       -     :>       109,  110,  111 
Speeches  by  Cowan,  Doolittle,  Simmons,  Bayard,  -  114,  115,  116 

Speeches  by  Willey,  Howard,  McDougall,   -       -  .  -       117,  118,  119 

Speech  by  Mr.  Simmer,      -       -       -       -       -       -       -     .  r      .-       -121 

Motion  to  strike  out  legal  tender  clause  lost,        -       -       -       -     121—122 

Speeches  of  King,  Pearce,  Salesbury,  Powell,         -       -  ,  .  -.       -  122—123 
Bill  passed  the  Senate  30  to  7,  -        -        -        -        - ..  -        -      124 

Letter  of  J.  W.  Simonton  011  the  origin  of  legal  tender  act,   -  124 


Objection  in  House  to  Senate  amendments,  -  125 — 126 

Mr.  Spaulding's  Speech  opposing  them,  -  127 

Speeches  by  Pomeroy,  Calvert,  Morrill,  Dunn,  English,    -       -     133—138 
Speeches  by  Pike,  Diven,  Windom,  Pendleton,       -  139—140 

Speeches  by  Hooper  and  Stevens  close  debate  on  amendments,  -     140 — 141 
Yeas  and  nays  to  pay  soldiers  and  sailors  in  coin,  -       -       -       -       -  144 

Yeas  and  nays  to  pay  interest  in  coin,  -    .  *  .    -       -       -       -       -      145 

Yeas  and  nays  to  sell  bonds  at  market  value,  -       -       +       -       -       -  146 
Yeas  and  nays  to  lay  bill  on  table,        *       -       -       -       T       -       .      147 
Conference  Committee— bill  passed,        -       -       *-.     --    . --.    -       -148 
Copy  of  legal  tender  act,  February  25, '62,  -_     -       -,  •    -\  -       -      149 
Samuel  Wilkeson's  letter  to  N.  Y.  Tribune,    -       .-.,..      -       -  152 
Temporary  deposits  in  Sub-Treasury,  -       -       -  -       -      152 

Certificates  of  indebtedness,      ---------  153 

$60, 000, 000  more  legal  tender  declared,        -       -       ...       .     154 

Secretary  Chase  asks  for  $150,000,000  more,     *       -       -       -       -       -154 

Secretary  Chase  asks  for  small  bills  less  than  $5,         -       -       -       -     155 

Action  of  Committee  of  Ways  and  Means  on  this,  -   . ,  *•       -       -       -  156 

Mr.  Spaulding's  Speech  upon  it,    - 157 

Mr.  Colfax's  Speech  and  Mr.  Stevens',     -   .    -       -       -       -       -       -  161 

Yeas  and  nays  on  passage  of  this  bill,  -       -       »       -       -       -       -      162 

Passed  the  Senate ;  yeas  22,  nays  13,         -       -       -       -       ~      -       -  163 

Copy  of  second  legal  tender  act,    -       -       -       -       -       -       -       -      163 

Postage  Stamps  and  Fractional  Currency,       -       -       -       -       -       -165 

Shinplasters  prohibited,  2d  Section  of  the  act, 165 

Bank  bill  again  recommended  by  Secretary  Chase,        -       -       -       -  167 

$900,000,000  loan  bill  reported  from  Committee,  - .     -       -       -       -      167 

Spaulding's  opening  Speech  upon  it,         ------  167—168 

Particulars  of  the  National  Debt,  Jan.  2,  1863,    -       -       -       -       -      170 

Constitutionality  of  a  National  Bank,      -       -       -       -       - .      -       -  172 

Constitutionality  of  State  Banks,  -       -       -----.      -      172 

Interest-bearing  Treasury  Notes,    -       -       -       -       -       -       ~       -  178 

Our  only  hope  is  in  military  success,    -       -       -       •*..--      179 
$100,000,000  legal  tender  to  pay  the  army,       -       -       -       -       -180—181 

Mr.  Gurly's  Speech  on  market  value  of  bonds,    -----      181 

Secretary  Chase's  special  letter  on  Bank  bill,  -       -       -       -       -       -  182 

Special  resolution  passed  to  pay  Soldiers,     -      '  -     —       -       -       -      182 
President  Lincoln's  Special  Message  on  the  resolution,  -       -     —       -  183 
Morrill,  Ward  and  Amasa  Walker's  Speeches  on   the    $900,000,000 

Loan  Act,  -       -       -       -       -       -       ...       -       .       -134 

Substitutes  of  Hooper  and  Stevens  lost,    :  ..-.     -       *       -       -       -      185 
$900,000,000  Loan  Bill  passed  both  Houses,     -  .    -     .  •       -       -       -  185 
Synopsis  of  the  bill  as  passed,       -       -       -       -       *       •       -  .    -     186 

Bank  bill  passed ;  yeas  and  nays,      -------  186 — 187 

No  National  Currency  issued  until  1864,      -       -       ...     187—188 
The  right  to  convert  notes  into  bonds  at  par  abrogated,        -       -       -188 
Jay  Cook  negotiates  $500,000,000  of  5-20  bonds,  -        -       -'..-.      -      189 
Mistake  of  the  Secretary  in  not  continuing  funding,       -       -       -       -  189 

Mr.  Spaulding's  two  letters  to  Morris  Ketchum  on  the  subject,         -      190 


vi 

Morris  Ketclium's  reply,  March  21,  1SG4,         -       -       -       -       -       -  195 

Second  letter  of  Mr.  Spaulding  to  Morris  Ketchum,  -      195 

Mr.  Chase  resigns— TV.  P.  Fessenden  appointed  Secretary  Treasury,  -  198 
Geo.  Harrington  Secretary  of  Treasury,  ad  interim,  -  198 

Gold  $2. 50  at  the  Board  of  Brokers, -  •    -       -198 

Great  inflation  of  the  currency,      -------     198—199 

Gold  $2.85i^— Gold  bill  in  force  only  15  days,        '-       -       -       -       -  199 

Legal  tender  TJ.  S-  notes  limited  to  $400,000,000,         -       -       -       -      199 

All  bonds,  notes  and  other  obligations  exempt  from  taxation,  -  -  200 
How  Secretary  McCulloch  paid  the  Army  at  close  of  the  War,  -  -  200 

$830,000,000  of  7-30  Treasury  notes  issued, 200 

Statement  of  Public  Debt  at  the  close  of  the  War,       -  201 

National  Bank  circulation,  $185,000,000, 201 

Tariff"  and  Internal  Revenue  laws.         -------      201 

Contraction  of  the  currency,     -       -       -       -       -       --       -       -  202 

Secretary  McCulloch  on  contraction,    -------      202 

Mr.  Alley's  Resolution  in  favor  of  contraction,       -----  202 

Yeas  and  nays  on  Mr.  Alley's  resolution  in  the  House,       -  202 

Contraction  of  the  currency  suspended,   -       -       -       -       -       -       -203 

Public  Faith— Debt  to  be  paid  in  coin, -      203 

Yeas  and  nays  on  this  bill,        ---------  204 

U,  S.  Grant  approves  the  bill, 205 

Decision  of  State  Courts  on  the  constitutionality  of  legal  tender,  -  -  205 
Coin  contracts  decided  valid  by  IT.  S.  Supreme  Court,  -  -  -  206 
Conclusion — summing  up,  --- 208—213 

APPENDIX. 

Mr.  Spaulding's  Speech  on  the  National  Currency  Bank  bill,  February 

19,  1863, 1—9 

Letter  of  Mr.  Spaulding  to  J.  X.  Orvis,  Esq.,  -       -  9—13 

Letter  of  Mr.   Spaulding  to  Hon.   H.   R.   Hubbard,  Comptroller  of 

Currency,  -----------     13—17 

Letter  of  Mr.  Spaulding  to  Secretary  McCulloch,         -       -       -       -       18 

Secretary  McCulloch's  reply,    ---------18 

National  Debt— No  repudiation,    -------         19—21 

No  State  taxation  of  U.  S.  Bonds,     -       -       *       -       -       -       -       -    22 

Mr.  Spaulding's  letter  to  Senator  Morgan,    -----        22—24 

Letter  of  Fisk  &  Hatch  to  the  Assistant  Secretary  of  the  Treasury,      -    24 

Assistant  Secretary's  reply,    --- 24 

Mr.  Spaulding's  remarks,  ---------     24 — 27 

Secretary  McCulloch's  letter  to  L.  P.  Morton  &  Co.,   -       -       i       -       27 
Mr.  Spaulding's  remarks,  -       -       -       -       -       *  -    »••      '-       -       -    27 

F.  E.  Spinner's  letter  to  Mr.  Spaulding,       -       ^  '    '-       -       -       -       28 

National  Currency— Legal  Tender,  -       -       -       -       -       -       -     28—33 

Mr.  Spaulding's  letter  to  Secretary  McCulloch,    -       -  .  '  u       -        34—35 

President  Lincoln's  Veto, .        -  36 

Mr.  Spaulding's  Speech,  May  3d,  1862.          *-       *       -       -        -         37—40 


[TTHIVERSITY. 

^lIFQ'^^' 

HISTORY 


OF   THE 


LEGAL  TENDER  ACT 


The  United  States,  at  the  breaking  out  of  the  rebellion,  had  no 
national  bank  currency,  and  no  gold  or  available  means  in  the 
Treasury,  or  Sub-Treasury,  to  carry  on  the  war  for  the  Union,  and 
consequently  the  means  to  prosecute  the  war  had  to  be  obtained 
upon  the  credit  of  the  government,  and  by  taxation.  The  fundable 
legal  tender  currency  was  the  most  available  form  of  credit  which 
the  government  could  use  in  crushing  the  rebellion.  It  was  at  once 
a  loan  to  the  government  without  interest,  and  a  national  currency, 
which  was  so  much  needed  for  disbursement  in  small  sums  during 
the  pressing  exigencies  of  the  war.  It  was  indispensably  neces- 
sar}T,  and  a  most  powerful  instrumentality  in  saving  the  govern 
ment  and  maintaining  the  national  unity. 

Experience  has  proved  that,  notwithstanding  it  was  a  forced 
loan,  the  end  justified  the  means,  and  that  no  parties  were  materi 
ally  injured  by  being  compelled  to  receive  this  currency,  so  long 
as  they  could  fund  it  at  any  time  in  six  per  cent,  twenty  j^ears 
bonds.  Although  it  was  a  war  measure — a  measure  of  necessity 
and  not  of  choice,  and  could  only  be  justified  on  that  ground, 
it  has,  for  many  years,  exerted  a  most  decisive  influence  over  the 
property  and  material  interests  of  eveiy  individual  in  the  United 
States.  It  has  affected  debtor  and  creditor,  producer  and  con 
sumer,  and  the  price  of  labor  and  of  every  article  consumed  in 
every  household.  It  still  exerts  a  mighty  influence  socially, 
commercially  and  political^,  over  the  people  of  this  great  nation, 
and  all  the  ramified  and  extensive  business  in  which  they  are 


6 

engaged.  Whether  for  good  or  evil,  it  1ms  been  and  still  is  a 
most  powerful  element  in  all  business  affairs  of  the  people,  as  well 
as  the  government,  and  the  war  debt  of  $2,500,000,000  incurred  in 
maintaining  the  national  union  is  more  or  less  affected  by  the 
large  volume  of  this  currency  still  outstanding. 

Having  been  requested  to  prepare  a  history  of  a  measure  of 
such  transcendent  importance  as  the  legal  tender  act,  and  having 
in  my  possession  a  considerable  number  of  documents,  letters,  and 
other  materials  relating  to  the  subject,  I  have  consented  to  put  them 
iuto  form,  in  order  that  the  facts  may  be  preserved  for  present 
and  future  reference,  and  which  may  be  of  some  use  in  enabling 
the  future  historian  to  write  a  chapter  on  the  financial  history  of 
the  war.  These  facts  will  be  presented  in  the  form  of  a  narrative 
of  the  circumstances  and  events,  of  the  most  grave  and  extraor 
dinary  character,  occurring  in  rapid  succession,  which  led  finally 
to  the  issue  of  legal  tender  Treasury  notes,  and  which  were 
endowed  with  the  attributes  of  money,  so  far  forth  as  the  Govern 
ment  had  power  under  the  Constitution  and  the  pressure  of  the 
crisis  to  impart  to  a  paper  currency  that  high  and  most  important 
attribute  of  sovereignty. 

I  was  a  somewhat  prominent  though  humble  actor  in  originating 
and  maturing  the  measure,  but  I  do  not  claim  any  particular  merit 
or  demerit  for  what  I  did  in  preparing  and  aiding  to  secure  the 
passage  of  the  bill.  I  was  placed  in  a  position  where,  if  I 
performed  m}T  official  duty,  I  must  act,  and  must  act  with  vigor 
and  promptitude.  The  perilous  condition  of  the  country  did  not 
admit  of  hesitanc}'  or  delay.  I  endeavored,  in  the  peculiar  and 
responsible  position  in  which  I  was  placed,  to  do  what  I  conceived 
to  be  my  duty,  and  that  is  all  I  claim  to  have  done.  My  asso 
ciates  performed  their  duty  with  equal  fidelity  and  usefulness. 

As  chairman  of  the  Sub-committee  of  Ways  and  Means,  it 
became  my  duty,  in  connection  with  my  associates,  to  devise  an 
adequate  plan  for  obtaining  the  necessary  means  for  prosecuting 
the  war  to  a  successful  issue.  The  rebellion,  after  the  battle  of 
Bull  Run,  had  assumed  most  gigantic  proportions.  An  Army  and 
Navy  of  over  half  a  million  of  men  had  been  hastily  brought  into 
the  service  of  the  United  States.  The  Capitol  itself  was  guarded 
by  a  vast  Army,  under  the  command  of  General  McClellan, 
which  encircled  it  in  all  directions.  The  Army  and  Navy  thus 
in  the  service  had  to  be  paid,  fed,  clothed  and  provided  with 
ships,  gunboats,  monitors  and  all  the  necessary  material  of 


war  to  make  them  effective  in  crushing  the  rebellion.  This 
required  vast  available  means  ;  where  were  these  means  to 
be  obtained  ?  It  was  plain  that  the}T  must  come  from  the  loyal 
people  themselves,  and  that,  from  whatever  source  these  means 
were  to  come,  the}'  must  be  obtained,  as  before  stated,  upon  the 
credit  of  the  government,  then  assailed  and  weakened  by  armed 
rebellion. 

The  banks  in  New  York,  Boston  and  Philadelphia  had,  during 
the  summer  and  fall  of  1861,  loaned  to  the  government  very  nearly 
the  sum  of  $150,000,000  in  gold,  which  had  so  exhausted  their 
resources  that  it  was  very  difficult  for  many  of  them  to  pay  the 
last  instalments  due  on  the  last  loan  of  150,000,000.  These 
banks,  at  the  commencement  of  the  war,  possessed  a  large  part  of 
the  available  gold  in  the  countiy,  but  in  paying  over  to  the 
Treasurer  the  gold  on  these  loans,  and  in  the  disbursement  of  the 
same  to  sustain  the  Army  and  Navy,  it  became  so  scattered  that  it 
could  not,  to  any  considerable  extent,  be  re-loaned  to  the  govern 
ment,  nor  could  it  any  longer  be  made  available  as  a  reserve  for 
the  banks.  The  banks  were  consequently  in  great  danger  of 
suspending  specie  payments  at  the  time  Congress  assembled  at  its 
regular  session  in  December,  of  that  year.  Congress  met  on  the 
2d  December,  1861.  The  House,  having  been  organized  at  the 
Extra  Session  in  July  by  the  election  of  the  Hon.  Galusha  A. 
Grow,  Speaker,  proceeded  at  once  to  business. 

On  the  5th,  the  ^vacancies  in  the  Standing  Committees  were 
filled  up.  Hon.  Samuel  Hooper,  of  Mass,,  a  new  member,  was 
appointed  on  the  Committee  of  AVays  and  Means  in  place  of  Sam 
uel  Appleton,  deceased;  and  Hon.  Horace  Maynard  in  place  of 
Hon.  John  A.  McClernand,  who  had  been  appointed  a  Briga 
dier  General  in  the  volunteer  army.  The  Committee  of  AVnvs 
and  Moans  then  consisted  of 

THADEUS  STEVENS,  of  Pa. 

JUSTIN  S.    MORRILL,   of  Vt. 

Jonx  S.  PHELPS,  of  Mo. 
ELHRIDGE  G.  SPAULDING,  of  N.    Y. 
VALENTINE  B.  HORTOX,   of -Ohio, 
ERASTUS  CORNING,  of  N.  Y. 
SAMUEL  HOOPER,  of  Mass. 
HORACE  MAYNARD,  of  Tenn.     j 
JOHN  L.  N.  STRATTON,  of  N.^rv 
Owing  to  the  pressure  of  business?  in  the  Treasury  Department? 


Secretary  Chase  did  not  get  his  Annual  Report  ready  to  submit  to 
the  House  until  the  10th,  and  it  was  not  printed  and  laid -on  the 
table  of  the  Committee  of  Ways  and  Means  until  near  the  middle 
of  December. 

Soon  after  the  report  of  the  Secretary  of  the  Treasury  was 
received,  finding  a  large  volume  of  business  in  the  Committee 
room  to  be  disposed  of,  the  Committee  agreed  to  the  appointment 
of  two  Sub-committees,  namely, 

One  Committee  on  the  National  Currency  bank  bill,  making  of 
loans,  issue  of  Treasury  notes,  bonds,  and  the  mode  of  raising 
the  means  to  carry  on  the  war,  consisting  of 

Mr.  SPAULPIXG, 

Mr.  HOOPKK, 

Mr.  CORXIXCJ. 

The  other  Committee  was  appointed  on  the  Tariff,  Internal 
Revenue,  and  taxation  generally,  consisting  of  three  or  four 
members,  Mr.  Morrill  of  Vermont,  being  chairman.  The  appro 
priation  bills  were  then  in  course  of  preparation,  Mr.  Stevens 
devoting  a  good  deal  of  time  in  perfecting  and  passing  them 
through  the  House,  as  chairman  of  the  General  Committee.  Mr. 
Phelps  was  at  this  time  absent  in  Missouri,  and  remained  absent 
for  several  weeks,  looking  after  public  affairs  in  that  State,  which 
were  then  in  a  very  disturbed  condition. 

The  Committee  of  Ways  and  Means  having  thus  divided  the 
subjects  before  it,  and  having  referred  the  papers  and  documents  to 
these  Sub-committees,  the  Committee  was  prepared  for  efficient 
work. 

The  Sub-committee,  of  which  Mr.  Spaulding  was  chairman, 
examined  with  care  the  report  of  the  Secretary  of  the  Treasury, 
to  ascertain  what  measures  he  proposed  for  providing  the  ways 
and  means  to  support  the  government  and  carry  on  the  war.  Here 
follows  an  extract  from  that  part  of  the  Secretary's  report  which 
was  referred  to  this  Sub-committee,  viz : 

"  To  enable  the  government  to  obtain  the  necessary  means  for  proseeil* 
ting  the  war  to  a  successful  issue,  without  unnecessary  cost,  is  a  problem 
which  must  engage  the  most  careful  attention  of  the  Legislature.  Tho 
Secretary  has  given  to  this  problem  the  best  consideration  in  his  power, 
and  now  begs  leave  to  submit  to  Congress  the  result  of  his  reflections. 

The  circulation  of  the  banks  of  the  United  States  on  the  1st  day  of 
January,  1861,  was  computed  to  be  $202,000,767.  Of  this  circulation, 
$150,000,000,  in  round  numbers,  was  in  the  States  now  loyal,  including 
Western  Virginia,  and  $50,000,000  in  the  rebellious  States.  The  whole  of 
this  circulation  constitutes  a  loan  without  interest  from  the  people  to  the 


9 

banks,  costing  them  nothing  except  the  expense  of  issue  and  redemption 
and  the  interest  on  the  specie  kept  on  hand  for  the  latter  purpose ;  and  it 
deserves  consideration  whether  sound  policy  does  not  require  that  the 
advantages  of  this  loan  be  transferred,  in  part  at  least,  from  the  banks, 
representing  only  the  interests  of  the  stockholders,  to  the  Government, 
representing  the  aggregate  interests  of  the  whole  people. 

It  has  been  well  questioned  by  the  most  eminent  statesmen  Avhether  a 
currency  of  bank  notes,  issued  by  local  institutions  under  State  laws,  is 
not,  in  fact,  prohibited  by  the  National  Constitution.  Such  emissions 
certainly  fall  within  the  spirit,  if  not  within  the  letter,  of  the  Constitution 
al  prohibition  of  the  emission  of  "bills  of  credit"  by  the  States,  and  ol 
the  making  by  them  of  anything  except  gold  and  silver  coin  a  legal  tender 
in  payment  of  debts. 

However  this  may  be,  it  is  too  dear  to  be  reasonably  diluted  that  Congress, 
under  its  Constitutional  powers  to  lay  taxes,  to  regulate  commerce,  and  to  regnint^ 
the  value  of  coin,  possesses  ample  authority  to  control  the  credit  circulation  which 
enters  so  largely  into  the  transactions  of  commerce,  and  affects  in  so  many  ways 
the  value  of  coin.  In  the  judgment  of  the  Secretary,  the  time  has  arrived  when 
Congress  should  exercise  this  authority.  The  value  of  the  existing  bank-note 
circulation  depends  on  the  laws  of  thirty-four  States,  and  the  character  of 
some  sixteen  hundred  private  corporations.  It  is  usually  furnished  in 
greatest  proportions  by  institutions  of  least  actual  capital,  circulation ,  com 
monly,  is  in  the  inverse  ratio  of  solvency.  A\r ell-founded  institutions,  of 
large  and  solid  capital,  have,  in  general,  comparatively  little  circulation ; 
while  weak  corporations  almost  invariably  seek  to  sustain  themselves  by 
obtaining  from  the  people  the  largest  possible  credit  in  this  form.  Under 
such  a  system,  or  rather  lack  of  system,  great  influctions,  and  heavy  losses 
in  discounts  and  exchanges  are  inevitable,  and  not  unfrequently,  through 
failures  of  the  issuing  institutions,  considerable  portions  of  the  circulation 
become  suddenly  worthless  in  the  hands  of  the  people.  The  recent 
experience  of  several  States  in  the  valley  of  the  Mississippi,  painfully 
illustrates  the  justice  of  these  observations;  and  enforces,  by  the  most 
cogent  practical  arguments,  the  duty  of  protecting  commerce  and  industry 
against  the  recurrence  of  such  disasters. 

The  Secretary  thinks  it  possible  to  combine  with  this  protection  a 
provision  for  circulation,  safe  to  the  community  and  convenient  for  the 
government. 

Two  plans  for  effecting  this  object  are  suggested.  The  first  contem 
plates  the  gradual  withdrawal  from  circulation  of  the  notes  of  private 
corporations,  and  for  the  issue,  in  their  stead,  of  United  States  notes, 
payable  in  coin  on  demand,  in  amounts  sufficient  for  the  useful  ends  of  a 
representative  currency.  The  second  contemplates  the  preparation  and 
delivery,  to  institutions  and  associations,  of  notes  prepared  for  circulation 
under  national  direction,  and  to  be  secured  as  to  prompt  convertibility 
into  coin  by  the  pledge  of  United  States  bonds  and  other  needful  regula 
tions. 

1.  The  first  of  these  plans  was  partially  adopted  at  the  last  session  of 
Congress,  in  the  provision  authorizing  the  Secretary  to  issue  United  States 
notes,  payable  in  coin,  to  an  amount  not  exceeding  $50.000,000.  That 
provision  may  be  so  extended  as  to  reach  the  average  circulation  of  the 
country,  while  a  moderate  tax,  gradually  augmented,  on  bank  notes,  will 
relieve  the  national  from  the  competition  of  local  circulation.  It  has  been 
already  suggested  that  the  substitution  of  a  National  for  a  State  currency, 


10 

upon  this  plan,  would  be  equivalent  to  a  loan  to  the  Government  without 
interest,  except  on  the  fund  to  be  kept  in  coin,  and  without  expense, 
except  the  cost  of  preparation,  issue  and  redemption;  while  the  people 
would  gain  the  additional  advantage  of  a  uniform  currency,  and  relief 
from  a  considerable  burden  in  the  form  of  interest  on  debt.  These  advan 
tages  are,  doubtless,  considerable ;  and  if  a  scheme  can  be  devised  by  which 
such  a  circulation  will  be  certainly  and  strictly  confined  to  the  real  needs 
of  the  people,  and  kept  constantly  equivalent  to  specie  by  prompt  and 
certain  redemption  in  coin,  it  will  hardly  fail  of  legislative  sanction. 

The  plan,  however,  isjupt  without  serious  inconveniences  and  hazards. 
The  temptation,  especially  great  in  times  of  pressure  and  danger,  to  issue 
notes  without  adequate  provision  for  redemption ;  the  ever-present  liabil 
ity  to  be  called  on  for  redemption  beyond  means,  however  carefully  pro 
vided  and  managed;  the  hazard  of  panics,  precipitating  demands  for  coin, 
concentrated  on  a  few  points  and  a  single  fund ;  the  risk  of  a  depreciated, 
and  depreciating,  and  finally  worthless  paper  money;  the  immeasurable 
evils  of  dishonored  public  faith  and  national  bankruptcy;  all  these  are 
possible  consequences  of  the  adoption  of  a  system  of  Government  circula 
tion.  It  may  be  said,  and  perhaps  truly,  that  they  are  less  deplorable 
than  those  of  an  irredeemable  bank  circulation.  Without  entering  into  that 
comparison.  the  Secretary  contents  himself  with  observing  that,  in  his  judgment, 
those  possible  disasters  so  far  outweigh  the  probable  benefits  of  the  plan,  that  he 
feels  himself  constrained  to  forbear  recommending  its  adoption. 

2.  The  second  plan  suggested  remains  for  examination.  Its  principal 
features  are:  first,  a  circulation  of  notes  bearing  a  common  impression, 
and  authenticated  by  a  common  authority;  second,  the  redemption  of 
these  notes  by  the  associations  and  institutions  to  which  they  may  be 
delivered  for  issue;  and,  third,  the  security  of  that  redemption  by  the 
pledge  of  United  States  stocks,  and  an  adequate  provision  of  specie. 

In  this  plan  the  people,  in  their  ordinary  business,  would  find  the  advan 
tages  of  uniformity  in  currency;  of  uniformity  in  security;  of  effectual 
safe-guard,  if  effectual  safe-guard  is  possible,  against  depreciation;  and 
of  protection  from  losses  in  discounts  and  exchanges;  while  in  the  opera 
tions  of  the  Government,  the  people  would  find  the  further  advantages  of 
a  large  demand  for  Government  securities,  of  increased  facilities  for  ob 
taining  the  loans  required  by  the  war,  and  of  some  alleviation  of  the  bur 
dens  on  industry  through  a  diminution  in  the  rate  of  interest,  or  a  partici 
pation  in  the  profit  of  circulation,  without  risking  the  perils  of  a  great 
money  monopoly, 

A  further  and  important  advantage  to  the  people  may  be  reasonably 
expected  in  the  increased  security  of  the  Union,  springing  from  the  com 
mon  interest  in  its  preservation,  created  by  the  distribution  of  its  stocks 
to  associations  throughout  the  country,  as  the  basis  of  their  circulation. 

The  Secretary  entertains  the  opinion  that  if  a  credit  circulation  in  any  form  be 
desirable,  it  is  most  desirable  in  this.  The  notes  thus  issued  and  secured 
would,  in  his  judgment,  form  the  safest  currency  which  this  country  has 
ever  enjoyed;  while  their  receivability  for  all  Government  dues,  except 
customs,  would  make  them,  w^herever  payable,  of  equal  value  as  a  cur 
rency  in  every  part  of  the  Union.  The  large  amount  of  specie  HOAV  in  the 
United  States,  reaching  a  total  of  not  less  than  $275,000,000,  Avill  easily 
support  payments  of  duties  in  coin,  while  these  payments  and  ordinary 
demands  will  aid  in  retaining  this  specie  in  the  country  as  a  solid  basis, 
both  of  circulation  and  loans. 


11 

The  whole  circulation  of  the  country,  except  a  limited  amount  of  foreign 
coin,  would,  after  the  lapse  of  two  or  three  years,  bear  the  impress  of  the 
nation,  whether  in  coin  or  notes;  while  the  amount  of  the  latter,  always 
easily  ascertainable,  and.  of  course,  always  generally  known,  would  not 
be  likely  to  be  increased  beyond  the  real  wants  of  business. 

He  expresses  an  opinion  in  favor  of  this  plan  with  the  greatest  confidence,  be 
came  it  has  the  advantage  of  recommendation  from  experience.  It  is  not  an 
untried  theory.  In  the  State  of  Xew  York,  and  in  one  or  more  of  the  other 
States,  it  has  been  subjected,  in  its  most  essential  parts,  to  the  test  of 
experiment,  and  has  been  found  practicable  and  useful.  The  probabilitie>s 
of  success  will  not  be  diminished,  but  increased  by  its  adoption  under 
national  sanction,  and  for  the  whole  country. 

It  only  remains  to  add  that  the  plan  is  recommended  by  one  other  con 
sideration,  which,  in  the  judgment  of  the  Secretary,  is  entitled  to  much 
influence.  It  avoids  almost,  if  not  altogether,  the  evils  of  a  great  and  sud 
den  change  in  the  currency,  by  offering  inducements  to  solvent  existing 
institutions  to  withdraw  the  circulation  issued  under  State  authority  and 
substitute  that  provided  by  the  authority  of  the  Union.  Thus,  through 
the  voluntary  action  of  the  existing  institutions,  aided  by  wrise  legislation, 
the  great  transition  from  a  currency  heterogeneous,  unequal,  and  unsafe, 
to  one  uniform,  equal,  and  safe,  may  be  speedily  and  almost  imperceptibly 
accomplished. 

If  the  Secretary  has  omitted  the  discussion  of  the  question  of  the  Constitutional 
power  of  Congress  to  put  this  plan  into  operation,  it  is  because  no  argument  is 
necessary  to  establish  the  proposition  that  the  power  to  regulate  commerce  and  the 
value  of  coin  includes  the  power  to  regulate  the  currency  of  the  country,  or  the 
collateral  proposition  that  the  power  to  affect  the  end  includes  the  power  to  adopt 
the  necessary  axd  expedient  means. 

The  Secretary  entertains  the  hope  that  the  plan  now  submitted,  if 
adopted  with  the  limitations  and  safe-guards  which  the  experience  and 
wisdom  of  Senators  and  Representatives  will,  doubtless,  suggest,  may 
impart  such  value  and  stability  to  Government  securities  that  it  ivitt  not  be  difficult 
to  obtain  the  additional  loans  required  for  the  service  of  the  current  and  the  suc 
ceeding  year  at  fair  and  reasonable  rates;  especially  if  the  public  credit  be 
supported  by  sufficient  and  certain  provision  for  the  payment  of  interest  and 
ultimate  redemption  of  the  principal*" 

Finding  from  the  above  extracts  from  the  report  of  Secretary 
Chase  that  lie  forbore  to  recommend  the  issue  of  United  States 
Treasury  notes  to  circulate  as  money,  and  that  lie  did  recommend 
the  National  Currency  bank  bill,  Mr.  Spanieling,  as  chairman  of  the 
Sub-committee,  addressed  a  note  to  the  Secretary  requesting  him 
to  furnish  the  draft  of  a  bank  bill  for  a  national  currency  "based 
on  a  pledge  of  public  stocks,  as  recommended  in  his  report,  and 
received  the  following  reply : 

TREASURY  DEPARTMENT,  ? 
Dec.  18th,  1861.         $ 

SIR:— I  have  the  honor  to"  acknowledge  the  note  of  the  Committee  of 
Ways  and  Means  of  this  date,  covering  the  note  of  yourself  as  chairman 
of  the  Sub-committee,  requesting  him  to  furnish  the  draft  of  a  bill  for  a 


12 

national  currency  based  on  the  pledge  of  public  stocks.  The'.  Secretary  of 
the  Treasury,  who  is  now  in  New  York,  will  give  to  your  request  his 
prompt  attention  on  his  return. 

With  great  respect. 

GEO.  HARRINGTON, 
Acting  Secretary  of  the  Treasury. 
To  HON.  E.  G.  SPAULDING, 

Ch.  of  Sub-Corn,  of  Ways  and  Means.  II.  K. 

On  the  return  of  the  Secretary  from  New  York,  it  was  ascertain 
ed  that  no  National  Currency  bank  bill  had  been  prepared.  The 
Secretary  then  requested  Mr.  Spaulding  to  prepare  a  bill  at  as 
early  a  day  as  possible.  Mr.  Spaulding,  as  chairman  of  the  Sub 
committee,  immediately  set  to  work  at  his  rooms  at  the  National 
Hotel  in  preparing  the  first  draft  of  the  bill,  which  was  there 
copied  by  Mr.  George  Bassett,  clerk  of  the  Committee  of  Ways 
and  Means.  This  was  during  the  Christmas  holidays;  Congress 
adjourning  over  two  or  three  days  at  a  time,  without  doing  much 
business,  no  quorum  being  present. 

On  the  24th  inst.  Mr.  Spaulding  wrote  a  letter  to  Mr.  Corning, 
then  at  Albany,  informing  him  that  he  was  making  a  draft  of  the 
National  Currency  bank  bill,  and  requesting  that  he  would  for 
ward  a  copy  of  the  New  York  Free  Banking  Law,  passed  in  1838, 
and  amendments  thereto,  for  the  use  of  the  Committee.  Mr, 
Corning  promptly  complied  with  this  request,  and  returned  the 
following  reply : 

ALBANY,  Dec.  26,  1861. 

MY  DEAR  SIR— I  am  this  morning  in  receipt  of  your  favor  of  the  24th 
inst.  I  send  you  by  this  day's  mail  a  copy  of  our  Bank  Laws,  with 
amendments  passed  since  1856.  This  matter,  as  recommended  by  Secretary 
Chase,  will  not,  in  my  judgment,  meet  the  approval  of  our  State,  hence  I  think 
much  care  should  be  had  in  drawing  up  the  bill. 
Yours,  very  truly, 

EBASTUS  CORNING. 
Hon.  E.  G.  SPAULDING,  Washington. 

When  the  frame  work  of  the  bill  was  nearly  completed,  it  was 
submitted  to  Mr.  Hooper,  the  only  other  member  of  the  Sub 
committee  then  in  Washington,  Mr.  Corning  having  gone  to 
Albanj-.  Mr.  Hooper  rendered  valuable  assistance  in  perfecting 
the  bill.  He  incorporated  into  it  some  provisions  which  experi 
ence  in  his  own  State  had  shown  to  be  valuable.  The  bill  was 
finally  completed  soon  after  Christmas.  A  few  days  thereafter  the 
National  Currency  bank  bill,  thus  hastily  prepared,  was  sent  by 
Mr.  Spaulding  to  the  public  printer,  and  two  hundred  copies 
printed  for  the  use  of  the  Committee  of  Ways  and  Means  and 


» A^- 

U* 

13 

*• 

the  Secretary  of   the    Treasury,  with  a  view  of   having 
maturely   considered    in    the  General    Committee,   amend 
corrected,   and  finally  to  be  reported  to  the  House.       Copi 
this  printed   bill    are    still  in  the    possession  of  Mr.   Spauldi 
the  chairman  of  the  Sub-committee,  which  formed  the  basis  of  the 
bank  bill  which  was  finally  adopted  more  than  a  year  afterwards. 
Mr.  Spaulding,  while  preparing  the  national  currency  bank  bill, 
upon  mature  reflection  came  to  the  conclusion,  that  it  could  not  be 
passed  and  made  available  quick  enough  to  meet  the  crisis  then 
pressing  upon  the  Government  for  money  to  sustain  the  Army  and 
Navy.     He  therefore  drafted  a  legal  tender  Treasury  note  section 
to  be  added  to  the  bank  bill,  hoping,  at  first,  that  it  might  be  made 
available  b}7  issuing  legal  tender  notes  direct  from  the  Treasury, 
while  the  bank  bill  was  put  in  operation  throughout  the  country. 
In  order  to  bring  the  subject  of  issuing  legal  tender  fundable  notes 
before  the  country,  the  section  thus  prepared  by  Mr.   Spauldino- 
was  furnished  to  the  New  York  Tribune,  and  published  in  the 
issue  of  the  31st  December,  1861,  and  is  as  follows: 

"That  for  temporary  purposes,  and  until  the  circulating  notes  authorized 
by  this  act  shall  be  issued  and  put  in  circulation  by  corporations  and 
associations  to  the  aggregate  amount  of  $100.000,000,  the  Secretary  of  the 
Treasury  be,  and  he  is  hereby  authorized  to  issue  $50,000,000  of  Treasury 
notes  on  the  faith  of  the  United  States,  payable  on  demand,  without  speci 
fying  any  place  of  payment,  and  of  such  denominations  as  he  may  deem 
expedient,  not  less  than  $5  each,  which  shall  be  receivable  for  all  debts  and 
demands  due  to  the  United  States,  and  for  all  salaries,  dues,  debts  and 
demands,  owing  by  the  United  States  to  individuals,  corporations  and  as 
sociations  within  the  United  States;  and  such  Treasury  notes  shall  also  be 
a  legal  tender  in  payment  of  all  debts,  public  or  private,  within  the 
United  States,  and  shall  be  exchanged  at  any  time  at  their  par  value,  the 
same  as  coin,  at  the  Treasury  of  the  United  States,  and  the  offices  of  Assist 
ant  Treasurers  in  New  York,  Boston,  Philadelphia,  St.  Louis  and  Cincin 
nati,  for  any  of  the  coupon  or  registered  bonds  which  the  Secretary  of  the 
Treasury  is  now,  or  may  hereafter  be  authorized  to  issue;  and  such  Treas 
ury  notes  may  be  re-issued  from  time  to  time,  as  the  exigencies  of  the  pub 
lic  service  may  require.  Such  Treasury  notes  shall  be  signed  by  the 
Treasurer  of  the  United  States,  or  by  some  officer  of  the  Treasury  Depart 
ment  designated  by  the  Secretary  of  the  Treasury,  and  shall  *be  counter 
signed  by  the  Register  of  the  Treasury,  or  by  some  oflicer  of  the  Treasury 
Department  designated  by  the  Secretary  of  the  Treasury  for  the  Register. 
And  all  the  provisions  of  an  act  entitled  "An  act  to  authorize  the  issue 
of  Treasury  notes,  approved  the  23d  day  of  December,  1857,"  so  far  as  the 
same  can  be  applied  to  the  provisions  of  this  section,  and  not  inconsistent 
therewith,  are  hereby  revived  and  re-enacted." 

Upon  more  mature  consideration  and  further  examination,  Mr. 
Spaulding  came  to  the  conclusion  that  the  bank  bill,  containing 


14 

* 

sixty  sections,  could  not,  with  the  State  banks  opposed  to  it,  be 
passed  through  both  Houses  of  Congress  for  several  months,  and 
that  so  long  a  delay  would  be  fatal  to  the  Union  cause.  The 
banks  in  New  York,  Boston  and  Philadelphia,  had  just  suspended 
specie  payments,  which  compelled  a  general  suspension  of  coin 
pa3Tments  by  the  Government,  and  all  the  other  banks  throughout 
the  country.  No  more  gold  could  be  loaned  to  the  Government, 
except  in  small  and  wholly  inadequate  amounts,  because  it  was 
not  to  be  had.  State  bank  bills  could  still  be  obtained,  but  the 
banks  having  suspended  specie  payments,  this  currency  was  depre 
ciated,  and  had  only  a  local  character  and  credit — not  being  much 
known  out  of  the  States  wl\ere  the  banks  were  located.  Hesitancy 
and  delay,  with  the  expenses  of  the  war  running  on  at  an  average 
of  $2,000,000  per  day,  would  have  been  fatal.  Mr.  Spaulding, 
therefore,  changed  the  legal  tender  section,  intended  originally 
to  accompany  the  bank  bill,  into  a  separate  bill,  with  alterations 
and  additions,  and  on  his  own  motion  introduced  it  into  the 
House  by  unanimous  consent  on  the  30th  of  December,  1861. 
It  was  read  twice,  and  referred  to  the  Committee  of  Ways  and 
Means,  and  ordered  printed  (House  Bill,  No.  182),  and  is  as 
follows : 

Mr.  Spaulding,  on  leave,  introduced  the  following  bill: 

A   BILL 
To  authorize  the  issue  of  treasury  notes  payable  on  demand. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the  United  States 
of  America  in  Congress  assembled,  That,  for  temporary  purposes,  the  Secre 
tary  of  the  Treasury  be,  and  he  is  hereby  authori/ed  to  issue  fifty  millions 
of  dollars  of  treasury  notes,  on  the  faith  of  the  United  States,  payable  on 
demand,  without  specifying  any  place  of  payment,  and  of  such  denomina 
tions  as  he  may  deem  expedient,  not  less  than  five  dollars  each,  which 
shall  be  receivable  for  all  debts  and  demands  due  to  the  United  States, 
and  for  all  salaries,  dues,  debts,  and  demands  owing  by  the  United  States 
to  individuals,  corporations,  and  associations  within  the  United  States; 
and  such  treasury  notes  shall  also  be  a  legal  tender  in  payment  of  all 
debts,  publip  and  private,  within  the  United  States,  and  shall  be  exchange 
able  at  any  time  at  their  par  value,  the  same  as  coin,  at  the  Treasury  of 
the  United  States,  and  the  offices  of  the  assistant  treasurers  in  New  York, 
Boston,  Philadelphia,  St.  Louis,  and  Cincinnati,  for  any  of  the  coupon  or 
registered  bonds  which  the  Secretary  of  the  Treasury  is  now  or  may 
hereafter  be  authorized  to  issue,  and  such  treasury  notes  may  be  re-issued 
from  time  to  time  as  the  exigencies  of  the  public  service  may  require. 
Such  treasury  notes  shall  be  signed  by  the  Treasurer  of  the  United  States, 
or  by  some  officer  of  the*  Treasury  Department  designated  by  the  Secre 
tary  of  the  Treasury,  and  shall  be  countersigned  by  the  Register  of  the 
Treasury,  or  some  officer  of  the  Treasury  Department  designated  by  the 


15 

Secretary  of  tho  Treasury  for  the  register;  and  all  the  provisions  of  the 
act  entitled  "An  act  to  anthori/e  the  issue  of  treasury  notes,'"  approved 
the  twenty-third  day  of  December,  one  thousand  eight  hundred  and 
ti  f'ty-seven.  so  far  as  the  same  can  be  applied  to  the  provisions  of  this  act, 
and  not  inconsistent  therewith,  are  hereby  revived  and  re-enacted. 

As  soon  as  the  bill  was  printed,  it  was  taken  up  in  the  Com 
mittee  of  Wa}rs  and  Means,  and  duly  considered.  Mr.  Hooper 
took  active  ground  in  favor  of  the  bill.  Mr.  Stevens  at  first  had 
some  doubts  about  its  constitutionality,  but  very  soon  decided  to 
support  the  measure.  Mr.  Morrill,  Mr.  Horton,  and  Mr.  Corn 
ing  actively  opposed  the  bill  in  the  Committee  and  in  the  House. 
Mr.  Maj'iiard  and  Mr.  Stratton  took  no  active  part  in  the  discus 
sions  while  the  bill  was  under  consideration  in  the  Committee. 
It  is  believed,  however,  that  Mr.  Maynard  was  favorable  to  the 
bill  from  the  start,  while  Mr.  Stratton  was  very  much  in  doubt 
what  course  he  would  take  in  relation  to  it,  either  in  Committee, 
or  in  giving  his  vote  in  the  House.  Mr.  Phelps  was  absent,  and 
took  no  part  while  the  bill  was  under  discussion  in  the  Committee. 

Mr.  Spaulding  finding  that  the  Committee  were  about  equally 
divided,  and  that  some  members  of  the  Committee  had  doubts 
as  to  the  constitutional  power  of  Congress  to  make  treasury  notes 
a  legal  tender,  called  upon  the  Attorncj^  General,  Hon.  Edward 
Bates,  for  his  opinion.  He  declined  to  give  an  official  opinion, 
but  consented  to  write  an  un-official  note  in  favor  of  its  con 
stitutionality.  The  following  is  a  cop}^  of  the  opinion  thus 
obtained : 

MONDAY  EVENING,  Jan.  G,  186-2. 

Hon.  E.  G.  Fpaulding,  M.  (7., 

At  the  National  Hotel : 

DEAR  SIR— Since  you  did  me  the  honor  of  a  call  this  afternoon,  and 
propounded  to  me  a  question  arising  out  of  the  pending  bill  "To  author 
ize  the  issue  of  treasury  notes  payable  on  demand,"  I  have  given  to  the 
subject  such  attention  as  the  very  brief  interval  afforded,  and  proceed  at 
once  to  answer. 

In  the  first  place,  permit  me  to  say,  that  my  views  of  the  place  I  hold 
forbid  me  to  give  your  question  a  formal  and  official  answer,  but  in  proof 
of  the  high  respect  which  I  entertain  for  you  and  your  honorable  Com 
mittee,  I,  as  a  private  man,  and  a  professed  constitutional  legist,  in  all 
frankness  will  give  you  my  opinion  upon  the  point  proposed,  and  this, 
with  all  brevity  and  without  argument,  for  the  time  does  not  allow 
elaborate  consideration. 

The  bill,  after  providing  for  the  issue  of  treasury  notes,  contains  i.  e< 
this  clause,  "and  which  treasury  notes  shall  be  a  legal  tender  in  payment 
of  all  debts,  public  and  private,  within  the  United  States,"  and  you  desire 
my  opinion  whether  this  clause  is,  or  is  not,  constitutional. 

Certainly  the  Constitution  contains  no  direct  verbal  prohibition,  and  I 


Ifi 

think  it  contains  no  inferential  or  argumentative  prohibition  that  ean  be 
fairly  drawn  from  its  expressed  terms.  The  first  article  of  the  Constitu 
tion,  section  eight,  grants  to  Congress  specifically  a  great  mass  of  power*. 
Section  nine  contains  divers  limitations  upon  Congress,  upon  the  United 
States,  and  upon  individuals;  and  section  ten  contains  restrictions  upon 
the  several  States.  This  last  section  is  the  only  one  that  treats  on  tender. 
^  No  titate  shall  make  anything  but  gold  and  silver  coin  a  tender  in  pay 
ment  of  debts."  This  applies  to  a  State  only,  and  not  to  the  nation;  and 
thus  it  has  always  been  understood  with  regard  to  the  next  preceding 
clause  in  the  same  section — no  State  shall  "emit  bills  of  credit."  The 
prohibition  to  emit  bills  of  credit  is  quite  as  strong  as  the  prohibition  to 
make  anything  but  gold  and  silver  coin  a  legal  tender;  yet  nobody 
doubts — Congress  does  not  doubt  its  power  to  issue  bills  of  credit.  Treas 
ury  notes  are  bills  of  credit,  and  I  think  the  one  is  just  as  much  prohibited 
as  the  other — neither  is  forbidden  to  Congress. 
The  time  is  too  short  for  argument,  and  so  I  remain,  with  all  respect, 

Your  obedient  servant, 

EDWARD  BATES. 

Mr.  Spaulding  read  this  letter  to  the  Committee  of  Ways  and 
Means.  The  discussion  on  the  bill  had  continued  for  several 
days,  and  when  the  vote  was  finally  taken,  it  appeared  that  the 
Committee  were  at  first  equally  divided — Mr.  Spaulding,  Mr. 
Hooper,  Mr.  Stevens,  and  Mr.  Maynard  voting-  in  the  affirmative, 
and  Mr.  Merrill,  Mr.  Horton,  Mr.  Corning,  and  Mr.  Stratton  in 
the  negative.  Mr.  Stratton  finally  consented  to  vote  for  the  bill, 
so  as  to  allow  it  to  be  reported  to  the  House.  The  bill  was  thus 
passed  through  the  Committee  of  Ways  and  Means. 

On  the  7th  of  Januaiy,  1862,  Mr.  Spaulding  reported  the  bill 
from  the  Committte  to  the  House.  It  was  read  twice,  committed 
to  the  Committee  of  the  whole  House  on  the  state  of  the  Union, 
and  ordered  to  be  printed.  (House  Bill  No.  187.) 

Mr.  Spaulding,  from  the  Committee  of  Ways  and  Means,  reported  the 

following  bill : 

A  BILL 

To  authorize  the  issue  of  demand  Treasury  notes. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the  United  States 
of  America  in  Congress  assem bled,  That,  for  temporary  purposes,  the  Secre 
tary  of  the  Treasury  be,  and  he  is  hereby  authorized  to  issue,  on  the 
credit  of  the  United  States,  one  hundred  millions  of  dollars  of  Treasury 
notes,  not  bearing  interest,  payable  generally,  without  specifying  any 
place  or  time  of  payment,  and  of  such  denominations  as  he  may  deem 
expedient,  not  less  than  five  dollars  each;  and  such  notes,  and  all  other 
Treasury  notes  payable  on  demand,  not  bearing  interest,  that  have  been 
heretofore  authorized  to  be  issued,  shall  be  receivable  for  all  debts  and 
demands  due  to  the  United  States,  and  for  all  salaries,  dues,  debts,  and 
demands  owing  by  the  United  States  to  individuals,  corporations,  and 
associations  within  the  United  States;  and  shall  also  be  lawful  money, 
and  a  legal  tender  in  payment  of  all  debts,  public  and  private,  within  the 


United  States,  and  shall  be  exchangeable  in  sums  not  less  than  one  hun 
dred  dollars,  at  any  time,  at  their  par  value,  at  the  Treasury  of  the  Unitod 
States,  and  at  the  offices  of  the  Assistant  Treasurers  in  New  York, 
Philadelphia.  St.  Louis,  and  at  the  depository  in  Cincinnati,  for  any  of 
the  six  per  centum  twenty  years  coupon  bonds  or  registered  bonds  which 
the  Secretary  of  the  Treasury  is  now,  or  may  hereafter  be  authorized  to 
issue ;  and  such  Treasury  notes  shall  be  received  the  same  as  coin,  at  their 
par  value,  in  payment  for  any  bonds  that  may  be  hereafter  negotiated  by 
the  Secretary  of  the  Treasury;  and  such  Treasury  notes  may  be  re-issued 
from  time  to  time  as  the  exigencies  of  the  public  service  may  require. 
There  shall  be  printed  on  the  back  of  the  Treasury  notes,  which  may  be 
issued  under  the  provisions  of  this  act,  the  following  words :  "  The  within 
note  is  a  legal  tender  ia  payment  of  all  debts,  public  and  private,  and  is 
exchangeable  for  the  coupon  or  registered  bonds  of  the  United  States  bear 
ing  six  per  centum  interest."  Such  Treasury  note  shall  be  signed  by  the 
Treasurer  of  the  United  States,  or  by  some  officer  of  the  Treasury 
Department  designated  by  the  Secretary  of  the  Treasury,  and  shall  be 
countersigned  by  the  Eegister  of  the  Treasury,  or  some  officer  of  the 
Treasury  Department  designated  by  the  Secretary  of  the  Treasury  for  the 
Register;  and  all  the  provisions  of  the  act  entitled  "An  act  to  authorize 
the  issue  of  Treasury  notes,"  approved  the  twenty-third  day  of  December, 
one  thousand  eight  hundred  and  fifty-seven,'  so  far  as  the  same  can  be 
applied  to  the  provisions  of  this  act,  and  not  inconsistent  therewith,  are 
hereby  revived  and  re-enacted;  and  the  sum  of  one  hundred  and  fifty 
thousand  dollars  is  hereby  appropriated,  out  of  any  money  in  the  Treasury 
not  otherwise  appropriated,  to  enable  the  Secretary  of  the  Treasury  to 
carry  this  act  into  effect. 

Soon  after  Mr.  Spaulding  introduced  his  bill  proposing  the 
issue  of  legal  tender  notes  to  circulate  as  money,  he  received 
many  letters  criticising  the  measure  in  rather  severe  terms. 
Among  others,  Mr.  Isaac  Sherman,  of  New  York,  an  old  friend, 
addressed  a  letter  to  him  of  this  character,  bearing  date  January 
4th,  1862,  and  at  the  same  time  suggesting  very  heavy  taxation  in 
various  forms,  as  the  best  plan  for  raising  the  money  to  carry  on 
the  war. 

To  this  letter  Mr.  Spaulding  made  the  following  reply: 

HOUSE  OF  REPRESENTATIVES,  > 
WASHINGTON,  Jan.  8,  18(52.     $ 

Isaac  Sherman,  Esq.,  Xcw  York: 

DEAR  SIR — In  reply  to  yours  of  the  4th  inst.,  I  would  say  that  the 
Treasury  note  bill  for  $100,000.000  agreed  upon  in  Committee  yesterday 
is  a  measure  of  necessity  and  not  one  of  choice. 

You  criticise  matters  very  freely,  and  very  likely  you  may  be  right  in 
what  you  say. 

We  will  be  out  of  means  to  pay  the  daily  expenses  in  about  thirty  days, 
and  the  Committee  do  not  see  any  other  way  to  get  along  till  we  can  get 
the  tax  bills  ready,  except  to  issue  temporarily  Treasury  notes.  Perhaps 
you  can  suggest  some  other  mode  of  carrying  on  the  Government  for  the 
next  one  hundred  days.  You  do  not  pretend  that  any  considerable 
amount  of  taxes  can  be  collected  for  the  next  three  months,  even  under 


18 

your  plan.     It  is  much  easier  to  find  fault  than  it  is  to  suggest  practicable 
means  or  measures. 

We  must  have  at  least  $100,000,000  during  the  next  three  months,  or  the 
Government  must  stop  payment.  With  the  navy  and  an  army  of  700,000 
men  in  the  field,  we  cannot  say  that  we  will  not  pay. 

I  will  thank  you  to  suggest  a  better  practicable  mode  of  getting 
$100,000,000  of  paying  means  during  the  next  three  months.  I  would  be 
glad  to  adopt  it,  and  the  Committee  would  be  glad  to  adopt  it.  Let  us 
have  your  specific  plan  for  this  purpose — one  that  will  produce  the  money 
— and  we  will  be  very  much  obliged  to  you.  In  haste. 
Yours  truly, 

E.  G.  SPAULDING. 

P.  S. — I  am  as  impatient  as  you  can  be  for  an  early  and  successful  advance 
of  the  army,  so  important  at  this  time  to  sustain  the  credit  of  the  Govern 
ment.  Will  it  be  done?  You  are  just  as  well  informed  on  that  subject 
as  any  of  us.  I  say  to  you  privately  that  I  could  find  fault  more  loudly 
than  you  do,  but  I  will  not  do  that  without  being  able  to  suggest  a  prac 
ticable  remedy;  and  I  might  say  many  things  to  you,  personally,  that  I 
might  not  put  on  paper. 

Confidentially  yours,  E.  G.  S. 

MR.   ISAAC  SHERMAN'S  LETTER. 

NEW  YORK,  Jan.  22,  1869. 
Hon.  E.  G.  Spauldinf/ : 

I  have  received  your  letter  of  the  20th,  and  inclosed  I  send  a  letter 
which  you  addressed  me  January  8th,  1862,  and  this  letter  fully  explains 
your  motives  in  advocating  the  legal  tender  act.  I  will  add  that  I  became 
fully  satisfied  that  the  immediate  wants  of  the  Government  rendered  it 
absolutely  necessary  that  legal  tender  notes  should  be  issued.  It  is  pos 
sible  that  a  good  tax  bill,  passed  and  enforced  in  1861,  might  have  averted 
the  necessity  of  the  legal  tender  act;  but  in  1862  it  was  impossible  to  pay 
the  expenses  without  an  issue  of  Government  paper  as  currency.  I  was 
shocked  at  first  at  the  idea  of  issuing  paper,  but  I  have  always  since  said 
that  you  finally  convinced  me  of  the  absolute  necessity  at  the  time  of  the 
paper  issue.  I  consider  your  letter  historical,  and  after  copying,  I  wish 
you  would  return  it  to  me. 

Yours  truly,  ISAAC  SHE  EM  AX. 

BANK      DELEGATES     IN     WASHINGTON MEETING     AT     THE     TREASURY 

DEPARTMENT. 

After  the  legal  tender  bill  was  reported  from  the  Committee 
of  Ways  and  Means  by  Mr.  Spaulding,  and  published  in  the 
newspapers  of  the  principal  cities,  opposition  to  it  manifested 
itself  in  various  ways.  At  first  tlue  New  Y"ork  city  press  were 
generally  opposed  to  the  legal  tender  clause.  The  Times  and 
Herald  early  came  into  the  support  of  the  measure.  The  Tribune 
and  Commercial  Advertiser  appeared  to  be  in  some  doubt,  but  in 
their  editorial  columns  opposed  it.  The  five-nine/  Posl,  World, 
and  Journal  of  Commerce  were  decidedly  hostile,  and  opposed  the 
measure  throughout.  Delegates  from  some  of  the  banks  in  New 


19 

York,  Boston  and  Philadelphia,  appeared  in  Washington  to 
oppose  the  bill.  The  reporters  of  the  New  York  press,  at  the 
time,  preserved  a  tolerably  accurate  account  of  their  doings, 
which  may  be  summed  up  substantially  as  follows : 

They  organized  by  appointing  Mr.  Singleton  A.  Mercer,  of 
Philadelphia,  as  chairman,  and  invited  the  Finance  Committee 
of  the  Senate,  and  the  Committee  of  Ways  and  Means  of  the 
House,  to  meet  them  at  the  office  of  the  Secretary  of  the 
Treasury,  on  Saturday  afternoon,  January  llth,  1862.  The 
invitation  was  accepted,  and  the  Convention  assembled  accord 
ingly  at  the  Treasury  Department. 

Delegates  from  New    York  Banks. 

Mr.  COE,  American  Exchange  Bank. 
Mr.  VERMILYE,  Merchant's  Bank. 
Mr.  MARTIN,  Ocean  Bank. 
Mr.  GALLATIN,  National  Bank. 

Delegates  from  Philadelphia  Hanks. 

Mr.  ROGERS,  Tradesman's  Bank. 

Mr.  MERCER,  Farmer's  and  Mechanics'  Bank. 

Mr.  PATTERSON,  Western  Bank. 

Delegates  from  Boston  Banks. 

Mr.  HAVEN,  Merchant's  Bank. 
Mr.  W ALLEY,  Revere  Bank. 
Mr.  BATES,  Bank  of  Commerce. 

Treas u  ry  Depa  rtmen t. 

SALMON  P.  CHASE,  Secretary  of  the  Treasury. 
Finance   Committee  of  the  Senate. 

Mr.  FESSENDEN,  of  Maine. 
Mr.  SIMMONS,  of  Rhode  Island. 
Mr.  SHERMAN,  of  Ohio. 
Mr.  HOWE,  of  Wisconsin. 
Mr.  PEARCE,  of  Maryland. 
Mr.  BRIGHT,  of  Indiana. 
Mr.  McDouGAL,  of  California. 

House   Committee  of  Ways  and  Means. 
Mr.  STEVENS,  of  Pennsylvania, 


20 

Mr.  MORRILL,  of  Vermont. 
Mr.  PHELPS,  of  Missouri. 
Mr.  SPAULDING,  of  New  York. 
Mr.  CORNING,  of  New  York. 
Mr.  HORTON,  of  Ohio. 
Mr.  STRATTON,  of  New  Jersey. 
Mr.  HOOPER,  of  Massachusetts. 
Mr.  MAYNARD,  of  Tennessee. 

Some  of  the  members  of  the  above  Committees  of  the  Senate 
and  House  were  not  present,  but  there  was  a  very  full  representa 
tion  from  each  Committee.  There  were  some  other  gentlemen 
present  from  Boards  of  Trade  of  different  cities. 

Mr.  James  Gallatin,  of  New  JTork,  made  the  principal  speech 
against  legal  tender,  and  on  behalf  of  himself  and  the  Bank 
Committees  from  New  York,  Boston,  and  Philadelphia,  and 
members  from  Boards  of  Trade  associated  with  them,  submitted 
the  following  plan  for  raising  money  to  carry  on  the  war,  viz : 

1.  A  tax  bill  to  raise,  in  the  different  modes  of  taxation,  $125,000,000, 
over  and  above  duties  on  imports. 

2.  Not  to  issue  any  demand  Treasury  notes,  except  those  authorized  at 
the  extra  session  in  July  last. 

3.  Issue  $100,000,000  Treasury  notes  at  two  years,  in  sums  of  five  dol 
lars  and  upwards,  to  be  receivable  for  public  clues  to  the  Government, 
except  duties  on  imports. 

4.  A  suspension  of  the  sub-Treasury  act,  so  as  to  allow  the  banks  to 
become  depositories  of  the  Government  of  all  loans,  and  to  check  on  the 
banks  from  time  to  time  as  the  Government  may  want  money. 

5.  Issue  six  per  cent,  twenty  year  bonds,  to  be  negotiated  by  the 
Secretary  of  the  Treasury,  and  without  any  limitation  as  to  the  price  lie  may 
obtain  jor  them  in  the  market. 

6.  That  the  Secretary  of  the  Treasury  be  empowered  to  make  tem 
porary  loans  to  the  extent  of  any  portion  of  the  funded  stock  authorized 
by  Congress,  ivith  power  to  hypothecate  such  stock,  and  if  such  loans  are  not 
paid  at  maturity r,  to  sell  the  stock  hypothecated  for  the  best  price  that  can  be 
obtained. 

These  propositions  having  been  read,  the  Secretary  and  Finance 
Committees  of  the  Senate  and  House  expressed  themselves  favor 
able  to  the  first  proposition  to  raise  by  taxation  $125,000,000  a 
year,  over  and  above  duties  on  imports.  It  will  be  observed  that 
this  plan  did  not  include  the  national  currency  bank  bill,  recom 
mended  by  the  Secretary  of  the  Treasury  in  his  Annual  Report, 
and  was  not,  therefore,  in  this  respect,  satisfactory  to  him. 

The  meeting  was  somewhat  conversational  in  character,  but 
there  appeared  to  be  a  general  dissent  by  the  Secretary  and  Com" 


21 

mittees  from  all  the  other  propositions.  Mr.  Hooper  expressed 
very  decidedly  his  dissent  to  them,  and  was  in  favor  of  the  legal 
tender  act  as  the  best  mode  of  providing  the  means.  The  only 
remarks  I  can  find  reported  as  being  made  by  any  member  of  the 
Committees  of  the  Senate  and  House  are  in  the  New  York  Tribune, 
January  13,  1862,  in  substance  as  follows: 

u  The  Sub-committee  of  Ways  and  Means,  through  Mr.  Spaulding, 
objected  to  any  and  every  form  of  '  shinning '  by  Government  through 
Wall  or  State  streets  to  begin  with ;  objected  to  the  knocking  down  of 
Government  stocks  to  seventy-five  or  sixty  cents  on  the  dollar,  the  inevit 
able  result  of  throwing  a  new  and  large  loan  on  the  market,  without  limit 
ation  as  to  price;  claimed  for  Treasury  notes  as  much  virtue  of  par  value 
as  the  notes  of  banks  which  have  suspended  specie  payments,  but  which 
yet  circulate  in  the  trade  of  the  North ;  and  finished  with  firmly  refusing 
to  assent  to  any  scheme  which  should  permit  a  speculation  by  brokers, 
bankers,  and  others,  in  the  Government  securities,  and  particularly  any 
scheme  which  should  double  the  public  debt  of  the  country,  and  double 
the  expenses  of  the  war,  by  damaging  the  credit  of  the  Government  to 
the  extent  of  sending  it  to  '  shin '  through  the  shaving  shops  of  New  York, 
Boston,  and  Philadelphia.  He  affirmed  his  conviction  as  a  banker  and 
legislator,  that  it  was  the  lawful  policy,  as  well  as  the  manifest  duty  of 
the  Government  in  the  present  exigency,  to  legalize  as  tender  its  fifty 
million  issue  of  demand  Treasury  notes,  authorized  at  the  extra  session 
in  July  last,  and  to  add  to  this  stock  of  legal  tender,  immediately,  one 
hundred  millions  more.  He  thought  that  this  financial  measure  would 
carry  the  country  through  the  war,  and  save  its  credit  and  its  dignity : 
at  the  same  time  we  should  insist  upon  taxation  abundantly  ample  to  pay 
the  expenses  of  the  Government  on  a  peace  footing,  and  interest  of  every 
dollar  of  the  public  obligation,  and  to  give  this  generation  a  clear  show 
of  a  speedy  liquidation  of  the  public  debt." 

This  Conference  did  not  result  in  devising  any  plan  or  arrange 
ment  which  received  the  assent  of  either  the  Finance  Committee 
of  the  Senate  or  the  Committee  of  Ways  and  Means  of  the 
House,  and  the  Conference  adjourned. 

The  bank  delegates  and  others  had  farther  consultations  with 
Secretary  Chase,  continuing  through  two  or  three  days,  and 
which  finally  resulted  in  an  arrangement  with  the  Secretary  alone, 
which  was  furnished  to  the  agent  of  the  Associated  Press  and 
published  on  the  15th  of  January,  1862,  as  follows: 

"  The  results  of  the  various  conferences  held  in  Washington  by  repre 
sentatives  from  Boards  of  Trade,  Chambers  of  Commerce,  and  Banking 
institutions,  among  themselves,  and  with  the  Secretary  of  the  Treasury, 
may  be  summed  up  as  follows : 

1.  The  general  views  of  the  Secretaiy  of  the  Treasury  are  assented  to. 

2.  The  banks  will  receive  and  pay  out  the  United  States  notes  (author 
ized  by  act  of  July  last)  freely,  and  sustain  in  all  proper  ways  the  credit 
of  the  Government. 


22 

3.  The  Secretary  of  the  Treasury  will,  within  the  next  two  weeks,  in 
addition  to  the  current  daily  payments  of  $1,500,000  in  United  States 
notes,  pay  the  further  sum  of  at  least  $20,000,000  in  7-30  bonds  to  such 
public  creditors  as  desire  to  receive  them,  and  thus  relieve  the  existing 
pressure  upon  the  community. 

4.  The  issue  of  United  States  demand  notes  not  to  be  increased  beyond 
the  $50,000,000  authorized  by  the  act  of  last  July,  but  it  is  desired  that 
Congress  should  extend  the  provisions  of  the  existing  loan  acts,  passed  at 
the  extra  session  in  July,  so  as  to  enable  the  Secretary  to  issue  in  exchange 
for  United  States  demand  notes,  or  in  payment  to  creditors,  notes  payable 
in  one  year,  bearing  3.65  per  cent,  interest,  and  convertible  into  7-30  three 
years  bonds,  or  to  borrow  under  the  existing  provisions  to  the  amount  of 
$250,000,000  or  $300,000,000. 

5.  It  is  thought  desirable  that  Congress  should  enact  the  national 
currency  bank  bill,  embracing  the  general  provisions  recommended  by 
the  Secretary  in  his  Annual  Beport. 

6.  It  is  expected  that  this  action  and  legislation- will  render  the  making 
of  the    United    States    demand    notes  a  legal  tender  or  their  increase 
beyond  the  $50,000,000  authorized  in  July  last  unnecessary." 

The  Committees  of  the  Senate  and  House  never  gave  any  assent 
to  this  agreement  made  by  Secretary  Chase  with  the  delegations 
above  mentioned,  for  the  reason  that  it  was  not  deemed  by  them 
adequate  to  the  crisis.  A  majority  of  the  Committee  of  Ways 
and  Means  adhered  to  the  legal  tender  bill,  then  pending  in  the 
House,  as  being  a  more  available  plan,  and  on  a  much  larger 
scale.  They  believed  it  was  necessary  to  authorize  immediately 
an  additional  issue  of  $100,000,000  of  United  States  fundable 
notes,  to  circulate  as  money,  and  be  made  a  legal  tender;  and 
that  $500,000,000  six  per  cent,  twent}*-  years  bonds  should  be 
authorized,  so  as  to  enable  the  holders  of  the  notes,  when  issued, 
to  fund  them  at  any  time  in  these  bonds. 

As  soon  as  the  plan  of  the  delegates  from  New  York,  Boston, 
and  Philadelphia  became  fully  known  to  the  country,  it  was  very 
generally  disapproved.  The  press  spoke  out  plainly  against  the 
Secretary  being  authorized  to  put  United  States  bonds  "  on  the 
market  without  any  limitation  as  to  the  price  he  might  obtain  for 
them  in  the  market,"  as  proposed  by  Mr.  Gallatin.  Members  of 
Congress  generally  opposed  it  and  numerous  letters  were  received 
by  Mr.  Spanieling  from  bankers,  and  other  prominent  citizens,  in 
opposition  to  any  such  scheme,  but  at  the  same  time  expressing 
themselves  in  favor  of  the  legal  tender  bill  and  urging-  its  imme 
diate  passage. 

The  following  is  a  sample  of  the  letters  received  about  this 
time  by  Mr.  Spaulding; 


LETTER    OF    HON.     MOSES    H.    GRINELL    TO    MR.     SPAULDING. 


YORK,  January  30.  1862. 

MY  DEAR  SIR  —  I  thank  you  for  your  able  speech,  and  can  only  say  that 
nine  out  of  twelve  persons  in  this  city  agree  with  you.  As  for  G  -  , 
and  a  few  egotistical  gentiemen  that  act  with  him,  they  should  be  driven 
out  of  Washington,  as  they  only  embarrass  the  Government;  and  it  seems 
to  me  that  their  policy,  if  adopted,  would  soon  ruin  the  Government  credit, 
and  break  down  the  country. 

Go  a  direct  tax  for  one  hundred  and  fifty  or  two  hundred  millions,  and 
then  issue  one  hundred  and  fifty  millions  Treasury  notes  legal  tender,  and 
we  will  go  on  without  any  trouble,  and  the  Government  credit  will  be 
saved  from  disgrace.  There  are  not  eight  bank  presidents  that  side  with 
G  -  .  He  is  an  odd  fish  —  has  very  little  influence  here.  Some  action 
must  be  had  soon,  or  our  country  will  be  in  a  deplorable  financial  condition. 

Yours  truly, 

M.  H.  GRINELL. 
Hon.  E.  G.  SPAULDING. 

LETTER    FROM    HON.     LEWIS    F.     ALLEN. 

BLACK  ROCK,  January  31,  1862, 
Hon.  E.  G.  ftpaulding  : 

MY  DEAR  SIR  —  I  have  just  read,  with  great  pleasure,  your  very  able 
speech  on  the  Treasury  note  bill  you  have  introduced  into  Congress.  The 
principle  and  plan  are  both  right,  and  what  the  country  demands  ;  and  I 
trust  both  Houses  will  put  it  right,  along  through,  regardless  of  what  the 
New  York  note  shavers  and  usurers  may  say,  for  they,  and  the  like,  in 
our  large  Atlantic  cities,  are  the  only  ones  who  will  oppose  it,  and  that 
for  the  reason  that  they  can  not  make  their  ten,  twenty  or  fifty  per  cent., 
by  buying  in  and  selling  out  the  stocks  which  they  want  passed  by  the 
Government,  in  place  of  the  sound,  available  Constitutional  currency  which 
you  propose.  I  see  by  my  Tribune  to-day,  that  there  is  good  prospect  that 
your  bill  will  pass  without  material  modification,  if  any.  I  hope  so,  and 
that  speedily. 

Truly  yours,  L.  F.  ALLEN. 

LETTER     FROM    J.     M.     GANSON,     BANKER,    OF    BUFFALO. 

NEW  YORK,  January  13,  1862. 

Hon.  E.  G.  Spavlding,   Washington  ; 

DEAR  SIR  —  Your  bill  on  Finance  is  received.  I  understand  the  pulse  of 
the  people.  Now,  then,  put  on  a  war  tax  of  $200,000,000,  issue  $150,0000,- 
000  demand  notes,  and  ten,  fifteen  and  twenty  year  bonds,  seven  per  cent. 
"coupon  bonds,"  redeemable  at  the  pleasure  of  the  Government  within 
that  time,  and  then  go  ahead.  Put  our  Generals  into  the  saddle,  and  all 
this  fussing  and  fooling  will  come  to  an  end  in  ninety  days.  One  grand 
rush  from  all  points  of  our  armies  will  coiv  down  the  rebels.  Send  home 
the  Bank  Committee  :  their  proposition  is  awful.  Let  a  few  leading  minds, 
in  connection  with  Chase,  nerve  up,  and  let  the  demand  notes  assume  the 
place  of  specie  in  every  particular.  A  tender  for  deposits  in  State  banks, 
a  tender  for  State  bank  notes,  and  receivable  for  all  Government  dues. 
We  must  have  one  terrible  bloody  battle,  and  must  not  shrink  from  the 
responsibility.  Let  members  of  Congress  cease  abusing  our  Generals. 
Put  the  right  men  in  the  right  place.  Have  no  proclamations  issued  by 


24 

the  Generals  unless  passed  upon  by  Lincoln  and  McClcllan  jointly.  Hard 
work,  less  pleasure-seeking,  good  financiering  and  energy,  will  wind  up 
this  war  shortly,  and  nothing  else  will  do  it. 

I  remain  yours  truly,  J.  M.  GAXSOX. 

LETTER    FROM    JAMES    TV.     SIMONTON,    ESQ.,    OF    X.     V.     TIMES. 

WASHINGTON,  January  1,3,  1802. 
Hon.  E.  O.  Spaulding  : 

DEAR  SIR—  I  failed  to  make  myself  clearly  understood  in  our  conver 
sation  last  evening,  or  rather  I  failed  to  tell  the  whole  story  in  suggesting 
payment  of  interest  on  demand  notes. 

What  do  you  think  of  providing  for  the  payment  of  interest  on  demand 
notes  (at  a  less  rate  than  that  on  loan  bonds)  from  their  date,  the  interest 
on  such  demand  notes  to  be  allowed  and  paid  only  when  they  are  presented 
to  be  converted  into  bonds  ? 

Would  not  the  tendency  of  such  an  arrangement  be  to  keep  the  current 
of  demand  notes  steadily  moving  towards  the  loan  office,  and  prevent  any 
possible  depreciation  of  either  class  of  paper  ? 

Of  course,  you  could  devise  a  means  (if  you  desire)  of  preventing  the 
payment  of  back  interest  on  debts  already  accumulated.    In  haste. 
Truly  yours, 

JAMES  W.  SIMONTOX. 

LETTER  FROM  THOMAS  DENNY  &  CO.,  BANKERS  AND  BROKERS, 
WALL    STREET,   NEW    YORK. 


YORK,  January  13,  1862. 
Hon.  E.  G.  Spaulding,  House  of  Representatives,  Washington,  D.  C.  : 

DEAR  SIR—  Although  not  personally  acquainted  with  you,  we  take  the 
liberty  of  giving  you,  in  few  words,  our  views  as  to  the  most  desirable 
measures  to  be  adopted  for  the  finances  of  the  country  at  the  present 
time.  It  will  not  do  at  all  to  crowd  on  the  market  at  the  present  time 
Government  stock  fast  enough  to  raise  the  amount  of  money  needed  to 
meet  our  wants.  The  price  would  run  down  so  fast  that  people  would 
become  alarmed,  and  afraid  to  take  it,  except  at  a  ruinous  sacrifice,  if  at 
all.  The  best  plan  is  that  which,  we  understood,  you  propose  to  adopt. 
Issue  $100,000,000  to  $150,000,000  demand  notes,  and  pay  them  out  as  the 
Dalits  of  the  Government  require  ;  make  them  a  legal  tender  in  all  trans 
actions  of  business  in  our  country  ;  make  them  convertible  at  the  pleasure 
of  the  holders  into  a  6  per  cent,  stock,  or  even  into  7-30  three  year  notes, 
unless  there  is  some  serious  objection  on  account  of  the  previous  negotia 
tions  of  the  7-30  notes;  pass  a  tax  bill  which  will  produce  $100,000.000  to 
$150,000,000.  The  above  plan  will  furnish  abundant  means  to  the  Govern 
ment.  and  will  meet  the  approbation  of  the  people.  It  wrill  furnish  an 
excellent  circulation  to  the  whole  country,  facilitate  all  business  transac 
tions  among  the  people,  make  the  money  market  easy,  and  raise  the 
prices  of  Government  stocks  so  that  loans  can  be  negotiated  on  favorable 
terins  when  more  money  if  wanted,  especially  if,  in  the  meantime,  the 
rebellion  is  pretty  well  crushed  down. 

If  the  above  plan  is  adopted,  public  sentiment  will  make  it  necessary 
for  the  banks  to  receive  and  pay  out  the  demand  notes,  and  the  whole 
effect  will  be  very  salutary  on  our  national  affairs.  The  tax  bill  will 


25 

create  a  general  demand  for  the  Treasury  notes  and  keep  them  at  or  near 
par.  We  write  in  great  haste,  as  practical  business  men,  and  are,  very 
respectfully 

Your  obedient  servants, 

THOAMS  DENNY  &  CO. 


LETTER  FROM  JOHN  E.   WILLIAMS,   ESQ. 

METROPOLITAN  BANK,     \ 
NEW  YORK,  January  20,  1862.  5 

DEAR  SIR — I  have  your  favor  of  18th  inst.  I  leave  my  bank  affairs  to 
write  you  at  once,  and  congratulate  you  on  the  prospect  of  being  able  to 
effect  a  remedy  for  the  fiscal  malady.  With  a  leader  in  the  Treasury 
Department  all  these  discordent  financial  schemes  would  disappear.  A 
man  of  ability,  of  business  talent  and  experience,  even  although  he  be 
not  endowed  with  the  creative  genius  of  a  Hamilton,  or  the  statistical 
knowledge  and  general  attainments  of  Albert  Gallatin,  would  devise  a 
plan  sufficiently  comprehensive,  sensible,  and  wise,  to  satisfy  the  public 
that  he  knew  whereof  he  wrote  and  spoke,  and  had  no  object  in  view  but 
to  restore  confidence  and  replenish  the  Treasury.  There  is  one  point  in 
reference  to  the  demand  legal  tender  notes  to  which  I  wish  to  call  atten 
tion.  It  may  seem  small,  but  I  think  it  important— that  is,  in  reference 
to  the  color  of  the  paper  on  which  such  notes  are  printed.  I  would  have 
it  different  from  that  used  for  any  other  notes ;  and  I  would  again  suggest 
that  that  color  be  yellow.  I  would  also  have  them  payable  one  year  after 
the  close  of  the  war.  There  is  no  risk  of  embarrassment  from  this  clause, 
as  we  could  sell  our  national  bonds  to-morrow  if  the  war  were  closed 
to-day.  I  would  also  simplify  the  matter  by  having  the  amount  one 
hundred  and  fifty  millions,  so  as  to  absorb  the  present  outstanding 
demand  notes  into  the  legal  demand  or  yellow  notes,  which  could  easily 
be  done,  and  yet  leave  you  on  this  loan  one  hundred  millions  net.  I  think 
it  would  make  these  demand  notes  more  valuable  to  insert  this  redemption 
feature  one  year  after  peace,  for  peace  must  come.  As  if  William  B. 
Astor  should  give  his  note  for  $100,000,  payable  one  year  after  his  death. 
He  must  die,  and  he  has  millions,  consequently  on  a  future  day  certain 
(though  not  yet  fixed),  his  note  would  be  paid  in  full. 

Please  consider,  then,  before  you  finally  decide,  the  amount,  the  color, 
and  the  time  of  payment  of  the  legal  tender  notes.  One  other  point^ 
Allow  me  to  refer  to  the  re-convertible  feature  of  the  six  per  cent,  twenty 
years  bonds.  That  is,  I  confess,  a  pet  idea  of  mine,,  but  I  find  it  favorably 
regarded  by  others,  though  new.  You  will  readily  perceive  that  when 
this  comes  to  be  understood  by  the  public  the  United  States  Government 
is  going  to  pick  up  all  the  floating  funds  throughout  the  whole  country, 
which  the  owners  do  not  require  to  use  in  less  than  three,  four,  five  or  six 
months,  whatever  time  you  fix.  Every  business  man  seems  to  think  this 
would  be  the  means  by  which  the  Government  would  borrow,  in  the 
aggregate,  a  large  amount.  For  who  would  not  lend  the  United  States 
his  spare  funds  when  he  knew  he  could  get  a  legal  tender  for  it,  with 
interest  whenever  he  called  for  it?  This  would  increase  the  value  of  the 
twenty  years  six  per  cent,  bonds.  Let  the  legal  tender  notes  be  con 
vertible  at  any  time  into  any  unsold  securities  of  the  United  States, 


26 

in  the  hands  of  the  Secretary  of  the  Treasury,  whether  now  authorized 
or  hereafter  to  be  issued.     But  only  let  the  six  per  cent,  bonds  be  re- 
convertible  into  legal  tender  Treasury  notes. 
Give  my  regards  to  Mr.  Hooper. 

Yours  very  truly, 

J.  E.  WILLIAMS. 
Hon.  E.  G.  SPAULDING,  Washington,  D.  C. 

On  the  following  Monday,  January  20th,  Mr.  Spaulding,  from 
the  Sub-committee  of  Ways  and  Means,  reported  to  the  General 
Committee  an  additional  section,  and  a  new  title  to  the  legal 
tender  note  bill,  which  were  adopted  by  the  Committee  of  Ways 
and  Means.  The  new  section  is  as  follows : 

SECTION  2.  "To  enable  the  Secretary  of  the  Treasury  to  fund  the 
treasury  notes  and  floating  debt  of  the  United  States,  he  is  hereby  further 
authorized  to  issue  on  the  credit  of  the  United  States  coupon  bonds,  or 
registered  bonds,  to  an  amount  not  exceeding  $500,000,000,  in  sums  of 
$100,  $200,  $500,  $1,000,  $5,000,  $10,000  and  $20,000,  and  in  such  proportions 
of  each  as  the  exigencies  of  the  public  service  may  require,  bearing  inter 
est  at  the  rate  of  six  per  cent  per  annum,  redeemable  after  twenty  years 
at  the  pleasure  of  the  United  States,  which  bonds  the  Secretary  of  the 
Treasury  is  hereby  authorized  to  deliver  at  their  par  value  to  any  creditor 
or  creditors  having  demands  due  against  the  United  States,  in  payment 
thereof,  and  to  deliver  the  same  to  officers,  employees  and  individuals  in 
payment  for  services  rendered,  for  supplies,  subsistence  and  materials 
furnished  to  the  United  States ;  and  he  may  also  exchange  such  bonds  at 
any  time  for  lawful  money  of  the  United  States,  or  for  any  of  the  treasury 
notes  that  have  been  or  may  hereafter  be  issued  under  any  former  act  of 
Congress,  or  that  may  be  issued  under  the  provisions  of  this  act." 

The  new  title  to  the  bill  adopted  at  this  meeting  of  the  Com 
mittee  was  as  follows : 

';  An  act  to  authorize  the  issue  of  United  States  Notes  and  for  the  re 
demption  or  funding  thereof,  and  for  funding  the  floating  debt  of  the 
United  States." 

';.  Soon  after  this  additional  section  and  new  title  were  adopted  by 
the  Committee  of  Ways  and  Means,  Mr.  Spaulding  submitted  the 
bill  and  additional  section  to  Secretary  Chase  and  the  Assistant 
Secretary,  Mr.  Harrington.  At  this  interview  the  form  of  the  bill 
and  the  manner  of  engraATing,  signing  and  issuing  the  legal  tender 
notes  was  fully  discussed,  as  well  as  the  form  and  manner  of  ex 
changing  them  for  the  six  per  cent,  bonds.  The  Secretary  sug 
gested  that  it  would  be  necessary  to  limit  the  place  for  exchanging 
the  notes  for  bonds  to  the  Treasury  at  Washington  instead  of  the 
Sub-treasuries  at  other  cities,  and  that  it  would  be  necessary  to 
have  one  or  more  penal  sections  to  guard  against  counterfeiting. 
The  original  bill  and  additional  section  were  finally  left  with  the 


27 

Secretary  to  put  into  such  form  as  he  desired,  incorporating  the 
amendments  which  he  had  proposed,  in  order  to  enable  him  to 
execute  the  provisions  of  the  bill  with  facility  as  soon  as  it  should 
become  a  law. 

On  the  22d  of  January,  1862,  Secretary  Chase  returned  to  Mr. 
Spaulding  the  bill  as  modified  and  amended  by  him,  accompanied 
by  the  following  letter :. 

TREASURY  DEPARTMENT,  Jan.  22,  1862. 

MY  DEAR  SIR— I  have  carefully  examined  the  bill  and  additional  sec 
tion  which  you  left  with  me,  and  availing  myself  of  the  aid  of  the  Assist 
ant  Secretary,  have  amended  the  bill,  retaining  the  whole  substance  of 
yours,  but  introducing  such  modifications  as  the  settled  modes  of  business 
in  the  department  and  considerations  of  convenience  and  economy  seem 
to  suggest. 

For  example — the  exchange  of  notes  for  bonds  is  confined  to  the  course 
of  business  of  the  department,  by  limiting  the  power  of  Assistant  Treas 
ury  and  Depositories  to  the  receipt  of  notes  and  issuing  certificates,  en 
titling  the  holder  to  bonds  by  which  serious  risks  are  avoided ;  and  the 
denominations  of  bonds  is  left  to  the  discretion  of  the  Secretary,  by  whic.h 
a  considerable  saving  will  probably  be  effected ;  as  the  demand  for  some 
denominations  is  so  limited  (for  $20,000  for  instance)  that  it  may  hardly 
be  worth  while  to  engrave  a  plate.  These  examples  show  the  nature  of 
the  modifications. 

The  appropriation  for  expenses  is  put  at  three  hundred  thousand  dollars. 
Should  the  act  be  fully  executed  by  the  issue  of  bonds  to  the  amount  of 
five  hundred  millions  of  dollars,  this  sum  will  not  probably  suffice.  It 
has  been  usual  in  providing  for  the  issue  of  bonds  merely  without  notes, 
to  allow  a  much  larger  proportion  for  expenses.  I  will  send  you,  if 
desired,  a  statement  which  will  make  this  clear. 

Regretting  exceedingly  that  it  is  found  necessary  to  resort  to  the  meas 
ure  of  making  fundable  notes  of  the  United  States  a  legal  tender,  but 
heartily  desiring  to  co-operate  with. the  Committee  in  all  measures  to  meet 
existing  necessities  in  the  mode  most  useful  and  least  hurtful  to  general 
interest,  I  remain,  with  great  respect, 

Very  sincerely  yours,  S.  P.  CHASE, 

Hon.  E.  G.  SPAULDING. 

The  bill  as  amended  by  the  Secretary  was  again  submitted  to 
the  Committee  of  Ways  and  Means,  and  adopted ;  and  thereupon, 
on  the  22d  of  January,  1862,  Mr.  Spaulding  again  reported  the 
bill  to  the  House  (Bill  No.  240)  in  the  nature  of  a  substitute  for 
Bill  No.  187.  It  was  read  twice,  and  made  the  special  order  for 
the  28th  inst. ,  at  one  o'clock. 

Each  day's  delay  made  it  more  and  more  apparent  that  the 
bill  must  pass  in  order  to  meet  the  overwhelming  demands  made 
upon  the  Treasury  to  sustain  the  army  and  navy.  The  end 
seemed  to  justify  the  means  contemplated  by  the  bill. 

On  the  23d  inst.  Secretary  Chase  directed  his  private  Secretary, 


28 

H.  G.  Plants,  Esq.,  to  request  Mr.  Spanieling  to  furnish  a  copy 
of  the  amended  legal  tender  note  bill  to  the  National  Intelligencer 
for  publication. 

Up  to  this  time  Col.  Seaton,  the  editor  of  that  paper,  had  not 
been  favorable  to  the  bill,  and  it  was  deemed  important  that 
the  old  National  Intelligencer  should  support  the  measure. 

The  following  is  a  copy  of  the  note  received  by  Mr.  Spaulding 
from  Mr.  Plants: 

TREASURY  DEPARTMENT,  Jan.  23,  1862. 

SIR — I  am  directed  by  the  Secretary  to  ask  you  if  you  will  he  so  good 
as  to  send  a  copy  of  the  Treasury  note  hill  to  the  National  Intelligencer,  in 
order  that  it  may  he  printed  to-momnv. 

Very  respectfully,  H.  G.  PLANTS. 

Hon.  E.  G.  SPAULDING. 

REPLY. 

HOUSE  OF  REPRESENTATIVES,  Jan.  24,  1862, 

DEAR  SIR— The  note  of  Mr.  Plants  reached  me  this  morning,  and  I 
have  handed  the  U.  S.  demand  note  bill  to  Col.  Seaton  in  person,  to  be 
published  in  the  next  issue  of  the  National  Intelligencer.  It  is  important 
that  there  should  be  full  co-operation  on  the  part  of  Col.  Seaton,  the  Cab 
inet,  and  all  our  friends  on  the  financial  measures  pending  in  Congress,  to 
overcome  the  opposition  already  developed  and  ensure  success.  My  inter 
view  with  Col.  Seaton  leads  me  to  suppose  that  he  will  hereafter  act  in 
concert  with  us. 

Yours  truly,  E.  G.  SPAULDING. 

Hon.  S.  P.  CHASE,  Secretary  of  Treasury. 

On  the  28th  inst. ,  the  bill  being  the  special  order  in  the  House, 
Mr.  Spaulding  opened  the  debate  upon  it  in  the  following 

SPEECH. 

The  House  being  in  Committee  of  the  Whole  (Mr.  KELLOGG,  of  Illinois, 
in  the  chair)  on  the  Demand  Treasury  note  bill- 
Mr.  SPAULDING  spoke  as  follows : 

Mr.  CHAIRMAN:  This  is  an  important  measure,  and  I  may  be  indulged 
for  a  few  moments  in  explaining  its  objects,  the  situation  of  our  finances, 
and  the  grounds  upon  which  we  rest  this  measure,  and  expect  it  to  be 
adopted.  In  the  first  place,  I  will  refer  to  the  loan  bills  passed  at  the 
extra  session  of  Congress,  in  July,  in  order  to  show  how  we  obtained  the 
means  to  carry  on  the  Government  from  that  time  to  the  present,  and  to 
show  how  the  Secretary  of  the  Treasury  has  performed  his  duty.  These 
bills  were  passed,  the  first  on  the  17th  of  July,  and  the  other  on  the  5th  of 
August.  They  gave  the  Secretary  of  the  Treasury  power  to  pledge  the 
credit  of  the  United  States  to  the  extent  of  $250,000,000.  Eeflections 
have  been  made  by  some  gentlemen  on  the  manner  in  which  the  Secretary 
of  the  Treasury  had  performed  his  duty  in  borrowing  that  money,  and 
with  some  disposition  to  criticise  his  actions.  As  a  general  reply,  I  will 
say  that  the  Secretary  has  acted  in  strict  conformity  with  the  law,  and 
borrowed  money  at  the  rates  authorized  by  Congress. 


29 

And,  sir,  I  am  disposed,  upon  this  floor  and  elsewhere,  to  sustain  the 
Secretary  and  all  Departments  of  the  Government  where  they  have 
discharged  their  duties  in  accordance  with  the  laws  which  have^been 
passed  by  us. 

The  Secretary  of  the  Treasury  first  borrowed  $100,000.000,  giving  Treas 
ury  notes  bearing  seven  and  three-tenths  per  cent,  interest,  and  he  next 
issued  United  States  bonds  at  six  per  cent,  interest  to  the  extent  of 
$50,000,000,  at  the  equivalent  of  par  for  seven  per  cent,  bonds,  and  raised 
about  $44,650,000;  upon  such  loan,  a  discount  of  over  $5,300,000  was 
sustained.  These  were  the  best  terms  that  could  be  obtained,  and  were 
regarded  at  the  time  as  very  favorable  to  the  Government. 

But  if  he  has  borrowed  the  money  at  a  high  rate,  it  was  authorized  by 
the  act  of  July.  I  am  disposed  to  sustain  the  Secretary  in  what  he  has 
done.  He  has  acted  in  good  faith,  and  he  should  be  sustained  by  us  all. 

I  may  be  permitted  to  say,  in  explanation  of  some  of  the  estimates 
which  I  shall  introduce  presently,  differing,  as  they  do,  from  the  estimates 
of  the  Secretary  of  the  Treasury  in  his  annual  report,  that  since  his  annual 
report,  he  has  changed  his  own  views  as  to  what  the  expenses  of  the  war 
will  be  up  to  July  next,  and  what  they  will  also  be  up  to  July,  1863,  and 
that  he  substantially  agrees  with  me  now  as  to  what  those  expenses 
will  be. 

In  the  discussion  of  this  important  measure,  I  desire,  Mr.  Chairman,  to 
present  the  entire  plan,  with  a  view  to  enlist  the  co-operation  not  only  of 
all  Departments  of  the  Government,  but  also  the  co-operation  of  all  the 
members  of  the  House,  without  regard  to  party  distinctions.  Hearty 
co-operation  is  desirable  to  the  success  of  the  important  financial  measures 
that  will  be  presented. 

Our  finances  deserve  our  most  serious  attention.  The  ways  and  means 
of  carrying  on  the  war  should  enlist  the  grave  consideration  of  every 
gentleman  on  this  floor  who  desires  the  preservation  of  this  Government. 
^re  were  never  in  greater  peril  than  at  this  moment.  It  will  require  all 
our  best  energies  to  successfully  meet  the  crisis  through  which  we  are 
passing.  I  am  oppressed  by  the  magnitude  of  the  work  before  us.  But, 
sir,  I  will  not,  I  dare  not— I  trust  we  shall  not  any  of  us — shrink  from  the 
responsibility  of  performing  every  duty  devolved  upon  us  in  this  great 
crisis  of  our  national  affairs. 

The  bill  before  us  is  a  war  measure,  a  measure  of  necessity,  and  not  of 
choice,  presented  by  the  Committee  of  Ways  and  Means  to  meet  the  most 
pressing  demands  upon  the  Treasury  to  sustain  the  army  and  navy,  until 
they  can  make  a  vigorous  advance  upon  the  traitors,  and  crush  out  the 
rebellion.  These  are  extraordinary  times,  and  extraordinary  measures 
must  be  resorted  to  in  order  to  save  our  Government,  and  preserve  our 
nationality. 

This  bill,  in  addition  to  the  fifty  million  of  demand  notes  authorized  by 
the  act  of  July  last,  authorizes  the  Secretary  of  the  Treasury  to  issue,  on 
the  credit  of  the  United  States,  one  hundred  millions  of  dollars  of  Treas 
ury  notes,  not  bearing  interest,  payable  to  the  bearer  at  the  Treasury,  or 
at  the  office  of  the  Assistant  Treasurer  in  the  city  of  ?Tew  York,  at  the 
pleasure  of  the  United  States,  and  of  such  denominations  as  he  may  deem 
expedient,  and  not  less  than  five  dollars  each;  and  such  notes  and  all 
other  United  States  notes  payable  on  demand,  not  bearing  interest,  here 
tofore  authorized,  are  made  receivable  for  all  debts  and  demands  due  to 
the  United  States,  and  for  all  salaries,  debts,  and  demands  owing  by  the 


30 

United  States  to  individuals,  corporations,  and  associations  within  the 
United  States,  and  are  also  declared  lawful  money  and  a  legal  tender  in 
payment  of  all  debts,  public  and  private,  within  the  United  States,  making 
altogether  $150,000,000  legal  tender  demand  notes. 

Provision  is  also  made  for  the  convenient  exchange  of  such  notes  for 
six  per  cent,  bonds  of  the  United  States  redeemable  in  twenty  years. 

Further  to  enable  the  Secretary  of  the  Treasury  to  fund  the  Treasury 
notes  and  floating  debt  of  the  United  States,  he  is  authorized  to  issue,  on 
the  credit  of  the  United  States,  coupon  bonds  or  registered  bonds  to  an 
amount  not  exceeding  five  hundred  millions  dollars,  and  redeemable  at 
the  pleasure  of  the  Government  after  twenty  years  from  date,  and  beafmg 
interest  at  the  rate  of  six  per  cent,  per  annum,  payable  semi-annually ; 
and  the  bonds  thus  authorized  are  to  be  of  such  denomination,  not  less 
than  fifty  dollars,  as  may  be  determined  upon  by  the  Secretary  of  the 
Treasury,  or  in  sums  not  less  than  $2,500;  for  which,  if  requested,  the 
Secretary  of  the  Treasury,  if  he  deem  it  expedient,  may  issue  similar 
bonds,  the  principal  and  interest  of  which  may  be  expressed  in  the  curren 
cy  of  any  foreign  country,  and  payable  there.  The  Secretary  is  author 
ized  to  issue  said  bonds  at  their  par  value  to  any  creditor  or  creditors  of 
the  United  States  who  may  elect  to  receive  them  in  satisfaction  of  their 
demands ;  provided  that  all  such  claims  or  demands  shall  have  been  first 
audited  and  settled  by  the  accounting  officers  of  the  Treasury ;  and  the 
Secretary  of  the  Treasury  may  also  exchange  such  bonds  at  any  time  for 
lawful  money  of  the  United  States,  or  for  any  of  the  Treasury  notes  that 
have  been  or  may  hereafter  be  issued  under  any  former  act  of  Congress, 
or  that  may  be  issued  under  the  provisions  of  this  act. 

The  bill  is  simple  and  perspicuous  in  its  terms,  and  easy  of  execution. 
It  is  a  Government  measure,  and  the  officers  of  Government  are  required 
to  execute  its  provisions. 

By  the  time  the  Secretary  of  the  Treasury  can  get  these  notes  engraved, 
printed,  and  signed,  ready  for  use,  all  other  available  means  at  his  com 
mand,  and  in  the  Treasury,  will  be  exhausted.  This  measure  is  therefore 
presented  under  the  highest  prerogatives  of  Government.  The  army  and 
navy  now  in  the  service  must  be  paid.  They  must  be  supplied  with  food, 
clothing,  arms,  ammunition,  and  all  other  material  of  war,  to  render  them 
effective  in  maintaining  the  Government  and  putting  down  the  rebellion. 
Having  exhausted  other  means  of  sustaining  the  Government,  this  meas 
ure  is  brought  forward  as  the  best  that  can  be  devised  in  the  present 
exigency  to  relieve  the  necessities  of  the  Treasury ;  and  I  trust  it  will 
pass  without  delay. 

At  the  extra  session  in  July  last,  Congress  authorized  the  Secretary  of 
the  Treasury  to  borrow  $250,000,000,  for  which  he  was  authorized  to  issue 
coupon  bonds,  or  registered  bonds,  or  Treasury  notes,  in  such  proportions 
of  each  as  he  might  deem  advisable.  The  bonds  were  to  be  issued  for 
.twenty  years,  at  a  rate  not  exceeding  seven  per  cent,  interest  per  annum, 
payable  half-yearly ;  and  the  Treasury  notes  were  to  be  issued  in  denomi 
nations  of  not  less  than  $50  each,  at  three  years,  with  interest  at  7  3-10  per 
annum,  payable  half-yearly,  and  exchangeable  at  any  time  for  twenty 
years  six  per  cent,  bonds.  Or,  at  the  option  of  the  Secretary,  he  was  per 
mitted  to  issue  $50,000,000  of  the  above  loan  in  Treasury  notes,  on  demand, 
in  denominations  of  not  less  than  five  dollars  each,  without  interest,  and 
made  receivable  in  payment  of  salaries  or  other  dues  owing  by  the  United 
States ;  or,  in  his  discretion,  he  was  authorized  to  issue  Treasury  notes  at 


31 

one  year,  bearing'  interest  at  3  65-100  per  cent,  per  annum,  exchangeable 
at  any  time  in  sums  of  $100,  or  upwards,  for  the  three  years  Treasury 
notes  bearing  7  3-10  per  cent,  interest ;  but  in  the  aggregate  not  to  exceed 
$250,000,000.  A  further  provision  was  made,  however,  to  wit:  that  the 
Secretary  of  the  Treasury  might  negotiate  any  part  of  the  loan  for  six  per 
cent,  twenty  years'  bonds,  at  a  rate  not  less  than  the  equivalent  of  par,  for 
bonds  bearing  seven  per  cent,  interest  per  annum,  half-yearly,  payable  in  twenty 
years. 

Under  these  provisions  the  Secretary  of  the  Treasury  has  borrowed  on  the  7  3-10 
per  cent.  Treasury  notes,  payable  in  three  years $100;000,000 

On  twenty  years  six  per  cent,  bonds,  reduced  to  the  equivalent  at  par  of  seven 
per  cent,  per  annum,  half-yearly,  say  at  89%  (  $44,661,230  97  actually  received 
into  the  Treasury),  for  which  six  per  cent,  bonds  were  issued 50,000.000 

Issued  and  put  in  circulation  as  currency  (and  to  be  put  into  circulation  within  a 
few  days)  all  the  demand  Treasury  notes  authorized  in  July,  not  bearing  in 
terest 50,090.000 


Borrowed  on  the  loan  bill  of  July • $200,000,000 

Paid  out  to  contractors  and  others  7  30-100  Treasury  notes  within  the  last  few 
days,  say 3,510,50!) 

$203,516,500 

The  total  amount  of  the  public  debt  up  to  the  present  time,  and  for 
which  U.  S.  stock  and  Treasun^  notes  have  been  issued,  is  as  follows : 

dp  to  July  1.  1861 $      90,867,828  6S 

Tnere  was  paid  to  creditors,  or  exchanged  for  coin  at  par.  at  different  dates 
in  July  and  August,  six  per  cent,  two  years'  notes  to  the  amount  of. 14,019.034  G6 

There  wa^  borrowed,  at  par,  in  the  same  months,  upon  sixty  days'  six  per 
cent,  notes,  the  sum  of. 12,877.750  00 

There  was  borrowed,  at  par,  on  the  19th  of  August,  three  years'  seven  and 
three-tenths  per  cent  bonds,  issued  for  most  part  to  the  subscribers  to  the 
national  loan 50,000,000  00 

There  was  borrowed  on  the  1st  of  October  upon  like  securities 50,000.000  00 

There  was  borrowed,  at  par,  of  seven  per  cent,  on  the  10th  of  November, 
upon  twenty  years'  six  per  cent,  bonds  reduced  to  the  equivalent  of  sevens, 
including  interest 50,000,000  00 

There  have  been  issued  and  circulated  of  Treasury  notes  payable  on  demand        39,000,000  00 

Making  an  aggregate  debt  in  various  forms,  to  January  15,  1862 306,764.613  34 

I  estimate  that  the  amount  required  up  to  July  1,  18tJ2,  will  be 343,235,386  60 


Total  debt  estimated  to  July  1,  1862 - 650.000,000  00 

I  estimate  for  the  fiscal  year  up  to  July  1,  1863,  if  the  war  continues  to  that 
time 550,000,000  00 

Total  indebtedness,  liquidated  and  unliquidated,  to  July  1, 1863 $1,200,000,000  00 

This  estimate  exceeds  that  of  the  Secretary  of  the  Treasury  by 
$300,000,000  to  July  1,  18G3.  This,  however,  includes  all  indebtedness 
against  the  Government,  whether  funded  or  not,  and  all  accounts  in 
process  of  being  audited,  and  such  as  are  passing  through  the  hands  of 
the  accounting  officers. 

There  is  now  over  $100,000,000  of  accrued  indebtedness,  in  different 
forms,  that  should  be  paid  at  an  early  day. 

With  this  large  accrued  indebtedness,  and  with  the  prospect  that  (unless 
this  bill  is  adopted)  the  Government  will  put  on  the  market,  to  the  high 
est  bidder,  still  further  issue  of  bonds,  to  the  amount  of  $250,000,000  to 
$300,000,000,  to  pay  current  expenses  to  July  next,  it  is  not  expected  that 
even  the  present  price  of  United  States  stocks  can  be  maintained  if  forced 
on  the  market  at  this  time.  We  haye  the  alternative,  either  to  go  into 
the  market  and  sell  our  bonds  for  what  they  will  command,  or  to  pass  this 
bill,  or  find  some  better  mode,  if  one  can  be  devised,  to  raise  means  to 
carry  on  the  war.  The  Secretary  has  the  means  of  defraying  the  daily 
expenses  required  to  be  disbursed  from  the  Treasury  for  only  a  few  days 
longer.  He  has  on  hand  about  one-fifth  of  the  loan  made  in  November 
last,  a  small  portion  of  the  demand  Treasury  notes  authorized  by  the  act 


32 

of  July— say  $10,000,000  not  yet  issued— and  such  of  the  remaining 
7  3-10  and  3  65-100  Treasury  notes  authorized  by  that  act  as  can  be  used 
in  paying  contractors,  for  supplies,  and  for  salaries,  and  other  Government 
dues  to  such  persons  as  are  willing  to  receive  them.  With  the  enormous 
expenditures  of  the  Government,  to  pay  the  extraordinary  expenses  of 
the  war,  it  requires  no  extended  calculation  to  show  that  the  Treasury 
must  be  supplied  from  some  source,  or  the  Government  must  stop 
payment  in  a  very  few  days. 

You  cannot  borrow  of  capitalists  any  more  money  on  twenty  years  seven 
per  cent,  bonds,  nor  on  your  7  3-10  Treasury  notes  at  the  rates  fixed  by 
the  act  of  July  last.  If  you  offer  to  the  people  and  put  on  the  market 
$300,000,000  more,  to  the  highest  bidder,  in  the  present  aspect  of  affairs, 
they  would  not  be  taken,  except  at  ruinous  rates  of  discount.  That  policy 
would  depreciate  the  bonds  already  taken  by  the  banks  and  the  people 
who  are  most  loyal  to  the  Government,  and  who  came  forward  as  your 
best  friends,  and  furnished  the  means  so  much  needed  during  the  last  few 
months  to  organize  your  armj^  and  navy ;  and,  besides,  depreciation  would 
greatly  increase  the  debt,  by  requiring  a  much  larger  amount  of  bonds  to 
be  issued  than  would  be  needed  if  your  loans  were  taken  at  par.  A  loan 
put  upon  the  market  in  the  present  depressed  state  of  United  States  stocks, 
to  be  followed  by  other  larger  loans,  is  not  regarded  as  a  favorable  mode 
of  providing  the  means  for  maintaining  the  Government  at  the  present 
time.  If  it  had  been  adopted  at  first  it  might  possibly  have  been  the  best 
mode ;  but  it  is  now  too  late  to  essay  that  plan,  and  I  believe  it  would  be 
ruinous  to  adopt  it.  I  fear  the  20  years  six  per  cent,  bonds  would,  under 
the  pressure,  fall  to  75,  70,  GO,  and  even  50  cents.  This  would  be  a  ruinous 
mode  of  raising  the  means' to  carry  on  the  Government. 

What,  then,  is  to  be  done  ?  The  Secretary  of  the  Treasury  in  his  annual 
report  does  not  recommend  the  issue  of  demand  Treasury  notes,  although 
he  points  out  many  advantages  that  would  result  to  the  Government  from 
the  issue.  He  suggests  two  plans :  first,  the  issue  of  demand  Treasury 
notes ;  and  second,  a  National  currency,-  secured  by  a  pledge  of  United 
States  stocks,  to  be  issued  by  banks  and  associations,  with  proper  regula 
tions  for  their  redemption  by  the  banks  themselves.  On  the  propriety  of 
the  issue  of  Treasury  notes  by  the  Government,  to  be  put  in  circulation  as 
money,  the  Secretary  says : 

"  The  first  of  these  plans  was  partially  adopted  at  the  last  session  of 
Congress,  in  the  provision  authorizing  the  Secretary  to  issue  United 
States  notes,  payable  in  coin,  to  an  amount  not  exceeding  fifty  millions 
of  dollars.  That  provision  may  be  so  extended  as  to  reach  the  average 
circulation  of  the  country,  while  a  moderate  tax,  gradually  augmented, 
on  bank  notes,  will  relieve  the  national  from  the  competition  of  local 
circulation.  It  has  been  already  suggested  that  the  substitution  of  a 
National  for  a  State  currency,  upon  this  plan,  would  be  equivalent  to  a 
loan  to  the  Government  without  interest,  except  on  the  fund  to  be  kept 
in  coin,  and  without  expense,  except  the  cost  of  preparation,  issue,  and 
redemption ;  while  the  people  would  gain  the  additional  advantage  of  a 
Uniform  currency,  and  relief  from  a  considerable  burden  in  the  form  of 
Interest  on  debt." 

These  remarks  of  the  Secretary  were  made  before  the  suspension  of 
specie  payments.  The  situation  of  the  country  is  now  very  different  from 
what  it  was  two  months  ago.  The  circumstances  have  changed ;  and  the 
Secretary  and  Congress,  will  find  it  necessary,  in  the  present  exigency, 


33 

to  conform  their  action  to  what  can  be  done,  and  not  to  what  they  would 
like  to  do,  were  it  otherwise  practicable. 

The  second  plan  of  the  Secretary,  and  the  one  which  he  recommends  for 
adoption,  namely,  a  national  currency,  to  be  issued  by  banks,  and  secured 
by  a  pledge  of  United  States  stocks,  the  sub-Committee  of  Ways  and 
Means  have  examined  with  considerable  care.  A  bill  has  been  prepared 
and  printed  for  the  use  of  the  Committee,  which  may,  after  some  modifica 
tion,  be  reported  to  the  House  for  its  action.  The  Committee  have  come  to 
the  conclusion  that,  however  meritorious  this  system  may  be  in  providing 
a  way  for  funding  the  stocks  of  the  United  States,  and  however  perfect  the 
system  may  be  made  by  Congress,  it  cannot,  if  adopted,  be  made  availa 
ble  soon  enough  to  meet  the  immediately-impending  necessities  of  the 
Government. 

This  new  system  of  banking  would  necessarily  go  into  operation  slowly. 
The  existing  circulation  of  bank  notes  in  the  loyal  States  is  supposed  to 
be  about  $140,000,000.  This  newr  currency,  when  issued,  would  come  into 
competition  with  the  existing  circulation  of  the  banks  already  established 
in  the  several  States ;  and  in  the  present  embarrassed  condition  of  mone 
tary  affairs,  several  months  must  necessarily  elapse  before  any  considera 
ble  amount  of  United  States  stocks  would  be  absorbed  by  banks  under 
this  proposed  new  law.  As  an  ultimate  mode  of  funding  some  part  of 
the  large  amount  of  Government  stock  which  has  already  been  issued,  and 
which  must  from  time  to  time  be  issued,  it  may  be  very  valuable ;  and  the 
national  currency  upon  it  would  no  doubt  obtain  a  wide  circulation,  and 
greatly  facilitate  the  payment  of  taxes  and  other  dues  to  the  Government. 
But  with  a  navy  and  army  of  600,000  in  the  field,  requiring,  with  the 
other  expenses  of  the  Government,  an  average  daily  expenditure  of  more 
than  $1,600,000,  this  new  system  of  banking  will  not  afford  relief  to  the 
Treasury  in  time  to  enable  the  Secretary  to  meet  the  pressing  demands 
that  are  made  upon  him. 

The  duties  received  at  the  different  custom-houses,  and  the  taxes  levied 
at  the  extra  session,  or  that  may  now  be  levied,  will  be  wholly  inadequate 
to  meet  the  requirements  of  the  Treasury  in  the  present  emergency  during 
the  next  six  months. 

If  you  cannot  borrow  the  money  on  the  credit  of  the  United  States, 
except  at  ruinous  rates  of  discount,  and  cannot  make  the  new  banking 
system  available  in  time,  and  cannot  realize  the  amount  required  from 
your  tariff  and  tax  bills,  in  what  mode  can  the  means  be  obtained,  and  the 
Government  be  carried  on  ?  It  is  believed  that  the  only  way  in  which  it 
can  be  done  is  by  issuing  Treasury  notes  payable  on  demand,  and  making 
them  a  legal  tender  in  payment  of  all  debts,  pnblic  and  private,  and  by 
adequate  taxation,  to  be  imposed  by  new  bills.  This  will  bring  into  full 
exercise  all  the  higher  powers  of  Government  under  the  Constitution. 
The  Constitution  confers  on  Congress  the  power  (art.  1,  sec.  8:) 

"  To  lay  and  collect  taxes,  duties,  imposts,  and  excises,  to  pay  the  debts 
and  provide  for  the  common  defence  and  general  welfare  of  the  United 
States. 

To  borrow  money  on  the  credit  of  the  United  States. 

To  regulate  commerce  with  foreign  nations,  among  the  several  States, 
and  with  the  Indian  tribes. 

To  coin  money,  regulate  the  value  thereof,  and  of  foreign  coins. 

To  raise  and  siqiport  armies. 

To  provide  and  maintain  a  navy. 


34 

To  make  all  laws  which  shall  be  necessary  and  proper  for  carrying  into 
execution  the  foregoing  powers,  and  all  other  powers  vested  by  the  Con 
stitution  in  the  Government  of  the  United  States,  or  in  any  Department 
or  officer  thereof." 

These  are  among  the  high  powers  of  Government  which  must  now  be 
brought  into  full,  ample  play.  The  table  which  I  have  before  me,  pro 
cured  from  the  Census  bureau.  showrs  that  the  true  value  of  the  property, 
real  and  personal,  within  the  United  States,  is  sixteen  billions,  one  hundred 
and  fifty-nine  millions,  six  hundred  and  sixteen  thousand  and  sixty-eight  dollars, 
($16,159,616,068,)  and  the  assessed  value  to  be  $12,006,756,585.  (See 
Appendix.) 

The  power  in  the  Constitution  to  "lay  and  collect  taxes,  duties,  imposts, 
and  excises,"  is  general  and  unlimited.  Congress  has  the  power  to  levy 
and  collect  any  amount  of  taxes  that  may  be  necessary  to  preserve  its 
existence  and  pay  all  its  debts.  Government  has  a  claim,  a  mortgage  in 
fact,  on  all  this  property,  to  that  extent.  Will  Congress  do  its  duty  in 
passing  bills  to  collect  these  taxes  ?  This  is  the  vital  question.  Will  Con 
gress  have  the  firmness  arid  the  courage  to  impose  the  necessary  taxation 
to  sustain  the  credit  of  the  Government?  Direct  taxation,  excises,  and 
internal  duties,  are  new  features  within  the  United  States.  They  will  be 
heavy  burdens  on  the  people,  but  essential  to  sustain  the  circulation  of 
demand  Treasury  notes.  The  tax-gatherer  will  be  an  unwelcome  visitor 
to  most  people,  but  his  face  must  soon  be  familiar 

Some  members  of  Congress  may  hesitate  to  vote  for  the  tax  bills,  fearing 
that  they  may  not  be  in  favor  with  their  constituency  at  home.  Under 
these  circumstances,  will  members  of  Congress  meet  the  question  boldly 
and  firmly?  Here  is  the  whole  property  of  the  country  at  the  will  of 
•Congress.  You  have  the  power  to  tax  it  to  an  unlimited  extent,  if 
necessary  to  sustain  the  Government. 

This  is  the  capital,  $16,000,000,000,000  in  amount,  on  which  your  Treasu 
ry  notes  and  bonds  rest.  This  claim  of  Government,  in  the  hands  of  Con 
gress,  is  direct  and  specific  on  the  banks  throughout  the  United  States, 
including  the  gold  and  silver  in  their  vaults ;  on  commerce ;  on  all  kinds 
of  production  and  business ;  on  railroads,  steamboats,  and  their  passen 
gers:  on  gas  companies;  on  manufacturing  companies  of  all  kinds;  in 
short,  all  real  and  personal  estate  of  every  kind  is  held  subject  to  the 
payment  of  the  Treasury  notes  and  bonds  issued  by  the  Government. 
Congress  is  clothed  with  this  mighty  power  to  sustain  the  nation  at  this 
time.  Will  you  hesitate  to  do  your  duty  ?  This  is  what  the  people,  the 
capitalist,  the  merchant,  and  all  who  confide  in  your  demand  notes,  want 
to  know.  If  they  take  these  notes,  they  want  to  know  positively  whether 
you  will  enforce  the  claim  of  the  Government  upon  the  property  of  the 
country,  to  the  full  extent  necessary  to  redeem  the  Treasury  notes,  and 
pay  punctuallythe  interest  on  the  bonds  which  they  take  of  you  to  sustain 
the  government.  Unless  you  are  prepared  to  satisfy  the  country  on  this 
point,  it  is  in  vain  to  issue  bonds  or  notes,  and  expect  them  to  pass  currently 
among  the  people.  Unless  this  is  done  they  will  depreciate,  and  they 
ought  to  depreciate;  but  with  ample  taxation,  cheerfully  voted  by 
Congress,  they  will  be  the  very  best  security  in  the  country,  because  the 
whole  property  of  the  country  is  held  for  their  redemption.  Congress  has 
a  plain  duty  to  perform.  It  has  ample  power.  This  power  should  now  be 
enforced.  Will  Congress  perform  this  duty  ? 


I  cannot  doubt  that  it  will.    The  emergency  is  great,  and  the 
this  power  is  now  an  imperative  necessity,  in  order  to  sustain  the  credit  of 
the  United  States  and  justify  the  Government  in  issuing  so  laiWjiin 
amount  of  Treasury  notes,  to  circulate  as  money  and  be  made  a  legalt^J^  • 
der  in  the  payment  of  debts.    Congress  (as  well  as  the  Committee  00 
Ways  and  Means)  is  of  opinion  that  we  must  raise  by  direct  taxes,  excises, 
internal  duties,  and  duties  on  imports,  during  the  current  year,  at  least 
$150,000,000.    That  was  shown  by  the  recent  resolution  passed  by  the 
Senate  and  House.     This  will  pay  the  current  ordinary  expenses  of  the 
Government,  and  the  interest  on  all  the  extraordinary  war  debt,   and 
create  a  sinking  fund  for  retiring  annually  a  portion  of  the  Treasury  notes. 

In  carrying  on  the  existing  war,  and  putting  down  the  rebellion,  it  is 
necessary  to  bring  into  exercise  all  the  sovereign  power  of  the  Govern 
ment  to  sustain  itself.  The  war  power  must  be  exercised  to  its  fullest  ex 
tent.  The  money  power  of  the  Government  must  be  brought  into  requisi 
tion.  The  power  to  tax  must  be  availed  of.  All  the  energies  of  the  nation 
must  be  aroused  and  brought  into  action.  The  power  of  the  Government 
and  tlie  means  of  the  people  must  all  be  devoted  to  this  great  work.  The 
Government  must  be  preserved,  and  this  nation  of  thirty-four  States  must 
be  perpetuated.  The  life  of  the  nation  is  in  peril ;  and  all  we  have  and  all 
we  hope  for  must  be  devoted  to  maintain  its  existence,  until  peace  and 
quiet  are  restored  in  every  part  of  our  common  country. 

This  bill  is  a  necessary  means  of  carrying  into  execution  the  powers 
granted  in  the  Constitution  "to  raise  and  support  armies,"  and  "to  pro 
vide  and  maintain  a  navy." 

In  the  present  crisis  of  our  national  affairs,  it  is  necessary  that  the  army 
should  be  "  supported,"  and  the  navy  "  maintained."  This  necessity  will 
not  be  questioned  by  any  loyal  member  on  this  floor. 

The  Constitution  provides  that  "  all  the  laws  necessary  and  proper  for  car 
rying  into  execution  the  foregoing  powers"  may  be  passed  by  Congress. 

If  the  end  be  legitimate,  and  within  the  scope  of  the  Constitution,  all  the 
means  that  are  appropriate,  which  are  plainly  adapted  to  that  end,  and 
which  are  not  prohibited,  may  be  constitutionally  employed  to  carry  it  in 
to  effect. 

If  a  certain  means  to  the  exercise  of  any  of  the  powers  expressly  given 
by  the  Constitution  to  the  Government  of  the  Union  be  an  appropriate 
measure,  not  prohibited  by  the  Constitution,  the  degree  of  its  necessity  is 
a  question  of  legislative  discretion  ;  not  of  judicial  cognizance. 

The  Government  of  the  United  States  is  not  prohibited  by  the  Constitu 
tion  from  issuing  Treasury  notes  on  demand,  and  making  them  a  legal  ten 
der  in  payment  of  all  debts  within  its  jurisdiction.  The  Constitution 
(Art.  1,  Sec.  10)  prohibits  the  States  from  making  any  thing  but  gold  and 
silver  coin  a  legal  tender  in  payment  of  debts ;  but  this  does  not  at  all  re 
strict  the  sovereign  power  of  the  United  States.  Congress  has  the  power 
to  coin  money  "regulate  the  value  thereof,  and  of  foreign  coin."  Gold 
and  silver  by  long  practice — a  practice  that  has  continued  for  centuries 
among  all  nations — has  become  the  legal  money  of  the  world  in  all  com 
mercial  transactions.  Its  real  intrinsic  value  is  not  as  great  as  that  fixed 
upon  it  by  Governments.  All  Governments  fix  the  value  of  gold  and  sil 
ver,  and  without  the  Government  stamp,  gold  and  silver  would  be  a  sim 
ple  commodity,  like  other  things  having  intrinsic  value.  Some  Govern 
ments  fix  the  value  of  coin  higher,  and  some  lower,  just  as  each,  for  itself 
chooses  to  determine.  Any  other  metal  or  thing  that  should  be  stamped, 


36 

and  its  value  regulated  by  all  the  Governments  of  the  world,  would  pass 
equally  well  in  all  commercial  transactions  as  gold  and  silver,  although 
not  intrinsically  as  valuable.  Exchequer  bills  or  Treasury  notes  whose 
value  is  fixed  by  Government,  and  stamped  as  money,  would  pass  as 
money  in  the  payment  of  debts  within  the  jurisdiction  of  the  Govern 
ment  fixing  such  value. 

In  regulating  the  value  of  "coin,"  either  foreign  or  domestic,  Congress 
may  provide  that  gold  and  silver  shall  be  of  no  greater  value  in  the  payment 
of  debts  within  the  United  States  than  the  Treasury  notes  issued  on  the 
credit  of  this  Government,  which  stamps  such  coin  and  fixes  its  value. 
These  high  powers  of  Government  have  been  frequently  exercised  by 
Great  Britain  during  her  continental  wars,  in  making  the  Bank  of  Eng 
land  notes  receivable  for  public  dues,  and  virtually  a  legal  tender  in  pay 
ment  of  debts,  by  suspending  the  statutory  clause  requiring  specie  pay 
ments  within  the  United  Kingdom;  and  other  Governments  of  Europe 
have  exercised  the  same  high  prerogatives  whenever  necessary  to  preserve 
their  existence.  But  we  are  not  left  to  this  argument  alone  for  constitu 
tional  power  to  issue  these  demand  notes  and  make  them  a  legal  tender  in 
payment  of  debts,  as  I  will  endeavor  hereafter  to  show. 

The  Constitution  provides  that  Congress  shall  have  power  to  pass  "all 
laws  necessary  and  proper"  for  carrying  into  execution  all  the  powers 
granted  to  the  Government  of  the  United  States,  or  any  department  or 
officer  thereof. 

The  wrord  necessary,  as  used ,  is  not  limited  by  the  additional  word  "pro 
per,"  but  enlarged  thereby. 

"  If  the  word  necessary  were  used  in  the  strict,  rigorous  sense,  it  would 
be  an  extraordinary  departure  from  the  usual  course  of  the  human  mind, 
as  exhibited  in  solemn  instruments,  to  add  another  word,  the  only  possible 
effect  of  which  is  to  qualify  that  strict  and  rigorous  meaning,  and  to  pre 
sent  clearly  the  idea  of  a  choice  of  means  in  the  course  of  legislation.  If 
no  means  are  to  be  resorted  to  but  sueh  as  are  indispensably  necessary, 
there  can  be  neither  sense  nor  utility  in  adding  the  word  ' proper ;'  for  the 
indispensable  necessity  would  shut  out  from  view  all  consideration  of  the 
propriety  of  the  means." — 3  Story's  Commentaries,  sec.  122. 

Alexander  Hamilton,  in  discussing  these  high  powers  of  the  Constitution, 
says: 

" The  authorities  essential  to  the  care  of  the  common  defence  are  these: 
to  raise  armies ;  to  build  and  equip  fleets ;  to  prescribe  rules  for  the  go 
vernment  of  both ;  to  direct  their  operations ;  to  provide  for  their  support. 
These  powers  ought  to  exist,  WITHOUT  LIMITATION  ;  because  it  is  impos 
sible  to  foresee  or  define  the  extent  and  variety  of  national  exigencies, 
and  the  correspondent  extent  and  variety  of  the  means  necessary  to  satis 
fy  them.  The  circumstances  which  endanger  the  safety  of  nations  are  in 
finite  ;  and  for  this  reason  no  constitutional  shackles  can  wisely  be  imposed 
on  the  power  to  which  the  care  of  it  is  committed"  *  *  *  "  This 
power  ought  to  be  under  the  direction  of  the  same  councils  which  are  ap 
pointed  to  preside  over  the  common  defence."  *  *  *  *  "It  must  be 
admitted  as  a  necessary  consequence,  that  there  can  be  NO  LIMITATION  of 
that  authority  which  is  to  provide  for  the  defence  and  protection  of  the 
community  in  any  matter  essential  to  its  efficacy;  that  is,  in  any  matter 
essential  to  information,  direction,  or  support  of  the  NATIONAL  FORCES." 

This  statement,  adds  Hamilton — 

"Rests  upon  two  anxioms,  simple  as  they  are  universal:  the  means  ought 


37 

to  be  proportioned  to  the  end;  the  persons  from  whose  agency  the  attain 
ment  of  the  end  is  expected  ought  to  possess  the  means  by  which  it  is  to  be 
attained."— Federalist,  No.  23,  pp.  95,  96. 

Congress  may  judge  of  the  necessity  in  the  present  exigency.  It  may 
decide  whether  it  will  authorize  the  Secretary  of  the  Treasury  to  issue 
demand  Treasury  notes,  and  make  them  a  legal  tender  in  payment  of 
debts,  or  whether  it  will  put  its  six  or  seven  per  cent,  bonds  on  the  mar 
ket,  at  ruinous  rates  of  discount,  and  raise  the  money,  at  any  sacrifice  the 
money-lender  may  require,  to  meet  the  pressing  demands  upon  the  Trea 
sury.  In  the  one  case  the  Government  will  be  able  to  pay  its  debts  at  fair 
rates  of  interest ;  in  the  other,  it  must  go  into  the  streets  shinning  for  the 
means,  like  an  individual  in  failing  circumstances,  and  sure  of  being  used 
up  in  the  end  by  the  avarice  of  tbose  who  may  exact  unreasonable  terms. 
The  Government  needs  and  should  have,  in  her  present  peril,  the  aid  and 
protection  of  all  patriotic  citizens. 

But,  sir,  knowing  the  power  of  money,  and  the  disposition  there  is 
among  men  to  use  it  for  the  acquisition  of  greater  gain,  I  am  unwilling, 
that  this  Government,  with  all  its  immense  power  and  resources,  should 
be  left  in  the  hands  of  any  class  of  men,  bankers  or  money-lenders,  how 
ever  respectable  and  patriotic  they  may  be.  The  Government  is  much 
stronger  than  any  of  them.  Its  capital  is  much  greater.  It  has  control  of 
all  the  bankers'  money,  and  all  the  brokers'  money,  and  all  the  property 
of  the  thirty  millions  of  people  under  its  jurisdiction.  Why,  then,  should 
it  go  into  Wall  street,  State  street,  Chestnut  street,  or  any  other  street, 
begging  for  money  ?  Their  money  is  not  as  secure  as  Government  money. 
All  the  gold  they  possess  would  not  carry  on  the  Government  for  ninety 
days.  They  issue  only  promises  to  pay,  which,  if  Congress  does  its  duty, 
are  not  half  as  secure  as  United  States  Treasury  notes  based  on  adequate 
taxation  upon  all  the  property  of  the  country. 

Why,  then,  go  into  the  streets  at  all  to  borrow  money  ?  I  am  opposed, 
in  our  present  extremity,  to  all  shifts  of  this  kind.  I  prefer  to  assert  the 
power  and  dignity  of  the  Government,  by  the  issue  of  its  own  notes, 
pledging  the  faith,  the  honor,  and  property  of  the  whole  loyal  people  of, 
the  country  to  maintain  their  circulation  and  provide  for  their  redemp 
tion. 

On  the  question  of  constitutional  power  we  are  not  left  without  the 
recorded  opinions  of  the  ablest  jurists  in  the  country. — 1  Kent's  Com., 
351— 2;— McOuttoch  v.  The  State  of  Maryland,  4  Wheat,  R.,  413—20. 

Chief  Justice  Marshall,  Daniel  Webster,  and  Judge  Kent  lay  down  the 
doctrine  as  follows : 

"The  Government  of  the  United  States  is  one  of  enumerated  powers, 
and  it  can  exercise  only  the  powers  granted  to  it ;  but  though  limited  in 
its  powers,  it  is  supreme  within  its  sphere  of  action.  It  is  the  Government 
of  the  people  of  the  United  States,  and  emanated  from  them.  Its  powers 
were  delegated  by  all,  and  it  represents  all,  and  acts  for  all. 

"  There  is  nothing  in  the  Constitution  which  excludes  incidental  or  im 
plied  powers,  The  Articles  of  Confederation  gave  nothing  to  the  United 
States  but  what  was  expressly  granted ;  but  the  new  Constitution  dropped 
the  word  expressly,  and  left  the  question  whether  a  particular  power  was 
granted  to  depend  on  a  fair  construction  of  the  whole  instrument.  No 
constitution  can  contain  an  accurate  detail  of  all  the  sub-divisions  of  its 
powers,  and  all  the  means  by  which  they  might  be  carried  into  execution. 


38 

It  would  render  it  too  prolix.  Its  nature  requires  that  only  the  great  out 
lines  should  be  marked  and  its  important  objects  designated,  and  all  the 
minor  ingredients  left  to  be  deduced  from  the  nature  of  those  objects. 
The  sword  and  the  purse,  all  the  external  relations,  and  no  inconsiderable 
portion  of  the  industry  of  the  nation,  were  entrusted  to  the  General  Gov 
ernment;  and  a  Government  entrusted  with  such  ample  powers,  on  the 
due  execution  of  which  the  happiness  and  prosperity  of  the  people  vitally 
depended,  must  also  be  entrusted  with  ample  means  for  their  execution.  Un 
less  the  words  imperiously  require  it,  we  ought  not  to  adopt  a  construc 
tion  which  would  impute  to  the  framers  of  the  Constitution,  when  grant 
ing  great  powers  for  the  public  good,  the  intention  of  impeding  their 
exercise,  by  withholding  a  choice  of  means.  The  powers  given  to  the 
Government  imply  the  ordinary  means  of  execution;  and  the  Govern 
ment,  in  all  sound  reason  and  fair  interpretations,  must  have  the  choice  of 
the  means  which  it  deems  the  most  convenient  and  appropriate  to  the  ex 
ecution  of  the  power.  The  Constitution  has  not  left  the  right  to  Congress 
to  employ  the  necessary  means  for  the  execution  of  its  powers  to  general 
reasoning.  Article  1,  section  8,  of  the  Constitution,  expressly  confers  on 
Congress  the  power  '  to  make  all  laws  that  may  be  necessary  and  proper 
to  carry  into  execution  the  foregoing  powers.'  Congress  may  employ 
such  means  and  pass  such  laws  as  it  may  deem  necessary  to  carry  into  ex 
ecution  great  powers  granted  by  the  Constitution ;  and  necessary  means, 
in  the  sense  of  the  Constitution,  does  not  import  an  absolute  physical  ne 
cessity,  so  strong  that  one  thing  cannot  exist  without  the  other.  It  stands 
for  any  means  calculated  to  produce  the  end.  The  word  necessary  admits 
of  all  degrees  of  comparison.  A  thing  may  be  necessary,  or  very  neces 
sary,  or  absolutely,  or  indispensably  necessary.  The  word  is  used  in  vari 
ous  senses ;  and  in  its  construction,  the  subject,  the  context,  the  intention, 
are  all  to  be  taken  into  view.  The  powers  of  the  Government  were  given 
for  the  welfare  of  the  nation.  They  were  intended  to  endure  for  ages  to 
come,  and  to  be  adapted  to  the  various  crisis  in  human  aifairs.  To  pre 
scribe  the  specific  means  by  which  Government  should  in  all  future  time 
execute  its  power,  and  to  confine  the  choice  of  means  to  such  narrow 
limits  as  should  not  leave  it  in  the  power  of  Congress  to  adopt  any  which 
might  be  appropriate  and  conducive  to  the  end,  would  be  most  unwise  and 
pernicious,  because  it  would  be  an  attempt  to  provide,  by  immutable 
rules,  for  exigencies  which,  if  foreseen  at  all,  must  have  been  foreseen 
dimly,  and  would  deprive  the  Legislature  of  the  capacity  to  avail  itself  of 
experience,  or  to  exercise  its  reason,  and  accommodate  its  legislation  to 
circumstances.  If  the  end  be  legitimate,  and  within  the  scope  of  the  Con 
stitution,  all  means  which  are  appropriate,  and  plainly  adapted  to  this 
end,  and  which  are  not  prohibited  by  the  Constitution,  are  lawful." 

It  is  plainly  within  the  scope  of  the  Constitution  that  the  Government 
should  maintain  itself;  that  the  army  should  be  supported;  that  the  navy 
should  be  maintained.  The  ways  and  means  of  doing  this  are  left  to  Con 
gress  to  provide.  Congress  may  do  this  entirely  by  taxation.  It  may 
provide  by  law  to  levy  and  collect  taxes  enough  every  year  to  pay  the 
whole  expenses  of  the  war  during  each  current  year,  and  so  "pay  as  we 
go."  It  may  issue  six  per  cent,  bonds  and  sell  them  on  the  market  for 
what  they  will  bring — even  if  they  will  not  sell  for  over  fifty  cents  on  the 
dollar — to  raise  money  to  carry  on  the  war.  It  may  issue  Treasury  notes 
payable  on  demand,  and  make  them  a  legal  tender  in  payment  of  debts. 
Either  one  or  all  of  these  modes  of  paying  the  expenses  of  the  Govern- 


39 

ment  is  left  to  the  discretion  of  Congress.  Either  mode  is  constitutional: 
and  it  is  left  to  the  sound  discretion  of  Congress  to  decide  which  mode  it 
will  adopt,  or  whether  it  will  adopt  a  part  of  each,  as  being  the  best  in  the 
present  crisis. 

My  own  impression  is,  that  it  will  be  best  for  ns  to  adopt,  in  part,  all  of 
these  modes  for  providing  the  means. 

1.  Raise  by  taxation  the  current  year,  over  and  above  the  amount  re 
ceived  from  duties  on  imports,  the  sum  of  $150,000,000. 

2.  Issue  $100,000,000  of  demand  Treasury  notes  in  addition   to    the 
$50,000,000  authorized  in  July,  making  them  a  legal  tender  in  payment  ot 
debts,  and  exchangeable  at  any  time  for  6  per  cent,  twenty  years'  bonds ; 
with  a  further  issue  of  demand  notes  if  Congress  shall  hereafter  deem  it 
necessary. 

3.  Provide  for  the  issue  of  all  the  twenty  years'  6  per  cent,  bonds  that 
may  be  necessary  to  fund  the  demand  Treasury  notes,  and  other  fundable 
Treasury  notes  that  may  be  issued,  (say  $500,000,000  six  per  cent,  twenty 
years'  coupon  bonds, )  and  pledge  $30,000,000  of  the  annual  taxes  to  pay 
the  interest  half-yearly  thereon,  and  pledge  $25,600,000  more,  as  a  sinking 
fund  to  redeem  the  principal  in  twenty  years. 

1.  This  tax  of  $150,000,000  would  afford  an  ample  basis  on  which  to  rest 
the  credit  of  the  Government  for  this  large  issue  of  Treasury  notes  and 
bonds,  and  would  insure  the  punctual  payment  of  the  interest  to  the  capi 
talists  who  might  hold  them. 

2.  The  demand  notes  put  in  circulation  would  meet  the  present  exigen 
cies  of  the  Government,  in  the  discharge  of  its  existing  liabilities  to  the 
army,  navy,  and  contractors,  and  for  supplies,  materials,  and  munitions  of 
war.    These  notes  would  find  their  way  into  all  the  channels  of  trade 
among  the  people ;   and  as  they  accumulate  in  the  hands  of  capitalists, 
they  would  exchange  them  for  the  six  per  cent,  twenty  years'  bonds. 

These  circulating  notes  in  the  hands  of  the  people  would  enable  them  to 
pay  the  taxes  imposed,  and  would  facilitate  all  business  operations  be 
tween  farmers,  mechanics,  commercial  business  men,  and  banks,  and  be 
equally  as  good  as,  and  in  most  cases  better,  than  the  present  irredeem 
able  circulation  issued  by  the  banks. 

3.  The  $500,000,000  six  per  cent,  twenty  years'  bonds  in  the  hands  of 
the  Secretary  of  the  Treasury,  ready  to  be  issued,  would  afford  ample  op 
portunity  for  funding  the  Treasury  notes  as  fast  as  capitalists  might  desire 
to  exchange  Treasury  notes  not  bearing  interest  for  coupon  bonds  of  the 
United  States  bearing  six  per  cent,  interest,  and  amply  secured  by  a  tax 
upon  the  people  and  all  their  property. 

In  this  way  the  Government  will  be  able  to  get  along  with  its  immedi 
ate  and  pressing  necessities  without  being  obliged  to  force  its  bonds  on 
the'market  at  ruinous  rates  of  discount;  the  people,  under  heavy  taxation, 
will  be  shielded  against  high  rates  of  interest ;  and  the  capitalists  will  be 
afforded  a  fair  compensation  for  the  use  of  their  money  during  the  pending 
struggle  of  the  country  for  national  existence. 

A  suspension  of  specie  payment  is  greatly  to  be  deplored,  but  it  is  not 
a  fatal  step  in  an  exigency  like  the  present.  The  British  Government  and 
the  Bank  of  England  remained  under  suspension  from  1797  to  1821 — '2 — a 
period  of  twenty-five  years.  During  this  time  England  successfully  re 
sisted  the  imperial  power  of  the  Emperor  Napoleon,  and  preserved  her 
own  imperilled  existence.  During  all  this  time  the  people  of  Great  Brit 
ain  advanced  in  wealth,  population,  and  resources.  Gdld  is  ndt  as  valu- 


40 

able  as  the  productions  of  the  farmer  and  mechanic,  for  it  is  not  as  indis 
pensable  as  are  food  and  raiment.  Our  army  and  navy  must  have  what  is 
far  more  valuable  to  them  than  gold  and  silver.  They  must  have  food, 
clothing,  and  the  material  of  war.  Treasury  notes  issued  by  the  Govern 
ment,  on  the  faith  of  the  whole  people,  will  purchase  these  indispensable 
articles,  and  the  war  can  be  prosecuted  until  wTe  can  enforce  obedience  to 
the  Constitution  and  laws,  and  an  honorable  peace  be  thereby  secured. 
This  being  accomplished,  I  will  be  among  the  lirst  to  advocate  a  speedy 
return  to  specie  payments,  and  all  measures  that  are  calculated  to  preserve 
the  honor  and  dignity  of  the  Government  in  time  of  peace,  and  which  I 
regret  are  not  practicable  in  the  prosecution  of  this  war. 

I  do  not  despair;  on  the  contrary,  I  have  an  abiding  faith  in  the  patriot 
ism,  firmness,  and  resources  of  the  people  to  maintain  this  Government. 
I  feel  that  wre  are  in  great  peril ;  but  when  the  people  and  our  rulers  be 
come  sufficiently  aroused  to  fully  appreciate  the  magnitude  and  probable 
duration  of  the  rebellion — a  rebellion  that  has  grown  into  most  gigantic 
proportions — then  shall  we  be  able  to  put  forth  the  energy  and  the  means 
necessary  to  crush  it. 

An.  early  and  successful  advance  of  our  armies  is  of  the  utmost  import 
ance.  We  need  such  an  advance  to  sustain  the  financial  credit  of  the 
Government.  We  need  it  to  prevent  foreign  intervention ;  we  need  it  to 
rouse  the  flagging  energies  of  the  people ;  and  above  all,  we  need  it  to 
vindicate  the  courage  and  invincibility  of  our  brave  soldiers,  who  are  so 
anxious  to  be  led  on  to  victory. 


APPENDIX. 


TABLE  A. 


True  Value  of  Real  and  Personal  Estate,  according  to  the  seventh   Census, 
1850,  and  the  eighth  Census,  1860,  respectively. 


STATES. 

1850. 
Real  and   Per 
sonal  Estate. 

I860. 
Real  and  Per 
sonal  Estate. 

Increase. 

Incr'ase 
per  ct. 
for  10 
years. 

\labama 

$  228  204  332 

$  495  237  078 

$°67  032  746 

117  01 

Arkansas  
California*  
Connecticut  
Delaware  . 

39,841,025 
22,161,872 
155,707,980 
•>1  069  55(5 

219'.  256!  473 
207,874,613 
444,274,114 
46  949  181 

179,415,448 
185,712,741 
288,566,134 
25  179  625 

450  32 
837  98 
185  32 
119  54 

Florida..  

22  862  270 

73  101  500 

50  239  230 

219  74 

Georgia  
Illinois. 

335.425,714 
156  265  006 

645,895,237 

871  860  282 

310,469,523 
715  595  276 

92  56 
457  93 

Indiana 

202  650  964 

528  8^>5  371 

326  185  107 

160  95 

Iowa  

23  714  638 

947  338  265 

923  693  627 

942  97 

Kansas 

31  397  895 

Kentucky 

301  628  456 

666  043  112 

364  414  656 

190  81 

Louisiana..  .. 

233  998  764 

602  118  568 

368  119  804 

157  30 

Maine.  .  .   . 

122  777  571 

190  211  600 

67  434  029 

54  92 

Maryland  

219,217,364 

376  919  944 

157,702,580 

71  93 

Massachusetts.  - 
Michigan..   . 

573,342,286 

59  787  255 

815,237,433 
257  163  983 

241,895,147 
197  376  728 

42  19 
330  13 

Minnesota 

not  ret'  d  in  full 

52  294  413 

Mississippi  

228,951  130 

607  394  911 

378  373  781 

165  26 

Missouri 

137  247  707 

501  214  39<3 

363  966  691 

265  18 

NewHampshire 
New  Jersey  t  — 
New  York 

103,652,835 
200,000,000 
1  080  309  216 

156,310,860 
467,918,324 
1  843  338  517 

52,658,025 
267,918,324 
763  029  301 

50  80 
133  95 
70  63 

North  Carolina 
Ohio 

226,800,472 
504  796  120 

358,739,399 
1  193  898  422 

131,938,927 
689  172  302 

58  17 
136  54 

Oregon  

5,063  474 

28  930  637 

23  867,163 

471  35 

Pennsylvania  .  . 
Rhode  Island.. 
South  Carolina. 
Tennessee  
Texas  

722,486,120 
80.508,794 
288,257,694 
201,246,686 
52,740  473 

1,416,501.818 
135.337,588 
548,138,754 
493,903,892 
365  ^00  614 

694,015,698 
54,828,794 
259,881,060 
292,657,206 
312  460  141 

96  05 
68  10 
90  15 
145  42 
592  44 

Vermont. 

92  9Q5  049 

122  477  170 

30  972  121 

32  83 

Virginia 

430  701  082 

793  949  (581 

362  548  599 

84  17 

\Vlsconsin 

42  056  595  \ 

273  671  668 

931  615  073 

550  72 

D.  of  Columbia 
Nebraska 

14,018,874 

41,084,945 
9  131  056 

27,066,071 

193  06 

New  Mexico..  - 
Utah?... 

5,174,471 

986,083 

20,813,768 
5  596  118 

15,639,298 
4  610  035 

302  24 
467  50 

Washington. 

5  601  466 

7,135,780,228 

16,159,616,068 

8,925,481,011 

126  45 

*  Only  13  counties  in  California  Jiave  been  returned. 

t  In  New  Jersey,  as  the  real  estate  was  only  returned,  the  above  is  partly  estimated. 


TABLE  B, 


2  able  showing  the  Federal  Population,  and  the  Assessed  Value  of  Real  and 
Personal  Property  of  the  Several  States  of  the  Union. — Census  1860. 


STATES. 

Federal 
Population. 

Value  of  Real 
Estate. 

Val.  of  Perso 
nal  Property. 

Alabama 

790  243 

$155  034  089 

$277,164,673 

Arkansas 

390  985 

63  254  740 

116,956,590 

California  

380'016 

66  906,631 

72,748,036 

Connecticut 

460  151 

191  478  842 

149,778,134 

Delaware  

111,498 

26,273,803 

13,493,439 

Florida             

115  737 

21  722,810 

47,206,875 

Georgia 

872  436 

179,801,441 

438,430,946 

Illinois 

1  711  753 

287  219  940 

101,987,432 

Indiana  -  

1,350,941 

291,829,992 

119.212,432 

Iowa                 

674  948 

149,433,423 

55,733,560 

Kansas 

107  110 

16  088  602 

6,429,630 

Kentucky 

1  065  517 

277  925  054 

250  287,639 

Louisiana           

576  086 

280,704  988 

155,082,277 

Maine 

628  276 

86  717  716 

67,662,672 

Maryland 

652  158 

65  341  438 

231,793,800 

Massachusetts     

1  231  065 

475,413,165 

301,744,651 

Michigan 

749  112 

123  605  084 

39,927,921 

Minnesota  . 

172  022 

25,391,771 

6>727,002 

Mississippi 

616  717 

157  836,737 

351,636,175 

Missouri  

1,136,331 

153,450,577 

113,485,274 

New  Hampshire 

326  072 

59,638,346 

64,171,743 

New  Jersey 

672  031 

151  161  942 

145,520,550 

New  York  

3,880,727 

1,069,658,080 

320,806,558 

North  Carolina 

860,234 

116,366,573 

175,931,029 

Ohio 

2,339  599 

687  518,121 

272,348,980 

Oregon 

52  464 

6  279  602 

12,745,313 

Pennsylvania 

2  906  370 

561,192,980 

158,060,355 

Rhode  Island 

174  621 

83  778,204 

41,326,101 

South  Carolina  ... 

542,795 

129,772,684 

359,546,444 

Tennessee 

999  533 

219,991,180 

162,504,020 

Texas 

530  159 

112,476,013 

156,316,322 

Vermont  .  .              

315,116 

65,639,973 

19,118,646 

Virginia  

1,399,731 

417,952,228 

239,069,108 

Wisconsin  . 

775,873 

148,238,766 

37,706,723 

29,568,427 

12,006,756,585 

5,081,661,050 

43 

At  the  conclusion  of  Mr.  Spaulding's  speech,  Mr.  VALLANDIG- 
HAM  obtained  the  floor  and  offered  a  substitute  for  the  bill,  which 
was  read.  (Congressional  Globe,  p.p.  526.) 

MR.  STEVENS  said  : — "I  will  follow  an  example  set  me,  and  give  notice 
of  an  amendment  which  I  shall  offer  to  the  bill.  It  is  to  make  the  semi 
annual  interest  payable  in  coin.  I  shall  make  it  when  we  reach  the  pro 
per  time  and  place." 

MR.  VALLANDIGHAM. — ''That  is  included  in  the  amendment  I  pro 
pose.  Mr.  Stevens — "Yes!  but  my  amendment  is  to  the  original  bill.'' 
Mr.  Vallancligham — "I  do  not  desire  to  speak  upon  the  bill  at  this  stage 
of  the  debate,  and  therefore  I  will  cheerfully  yield  to  my  colleague  (Mr. 
Pendleton),  who  proposes  to  discuss  the  constitutional  question  of  legal 
tender."  Mr.  Pendleton  obtained  the  floor. 


MR.  PENDLETON,  on  the  29th  inst.  made  an  elaborate  speech  in 
opposition  to  the  constitutionality  as  well  as  the  expediency  of 
the  legal  tender  clause.  He  commenced  by  saying, 

"  MR.  CHAIRMAN,  I  was  glad  to  hear  the  announcement  made  by  the 
gentleman  from  Vermont,  (Mr.  Morrill),  a  member  of  the  Committee  of 
Ways  and  Means,  by  my  colleague  (Mr.  Vallandigham),  by  the  gentleman 
from  Xew  York,  (Mr.  Eoscoe  Conkling),  and  by  the  gentleman  from 
Pennsylvania,  (Mr.  Stevens),  that  they  each  intended  to  propose  to  the 
House  to  make  changes  in  this  bill,  either  by  way  of  amendment  or  sub 
stitute." 

MR.  PENDLETON — "These  notes  are  to  be  made  lawful  money  and  a 
legal  tender  in  discharge  of  all'pecuniary  obligations,  either  by  the  Govern 
ment  or  individuals,  a  character  which  has  never  been  given  to  any  note 
of  the  United  States,  or  any  note  of  the  Bank  of  the  United  States  by  any 
law  ever  passed.    Kot  only,  sir,  was  such  a  law  never  passed,  but  such  a 
law  was  never  voted  on,  never  proposed,  never  introduced,  never  recom 
mended  by  any  department  of  the  Government ;  the  measure  was  never 
seriously  entertained   in    debate  in    either   branch  of  Congress."    MR. 
CONKLING  interrupting,  enquired  "whether  the  present  Secretary  is  in 
favor  of  making  paper  a  legal  tender?"    MR.  SPAULDING — "In  reply  to 
the  question  of  my  colleague,  I  will  say  that  the  Secretary  of  the  Trea 
sury  has  been  called  upon  for  his  opinion  in  regard  to  this  bill.    We  were 
assured  that  his  reply  would  be  sent  to  us  yesterday,  but  we  did  not  re 
ceive  it.    We  expect  his  answer  every  hour."    MR.  CONKLING — "I  am 
not  certain  that  I  understand  what  my  colleague  said.    Does  he  expect  a 
letter  from  the  Secretary  of  the  Treasury  which  will  contain  his  views  on 
the  financial  question,  and  also  on  the  legal  question?"    Mr.  Spaulding— 
"Upon  the  bill  specifically."    Mr.  Conkling — "Containing  the  legal  ten 
der  clause?"    Mr.  Spaulding — "Yes,  sir."    MR.  PENDLETON — "I  cannot 
answer  the  question1  so  far  as  the  opinions  of  the  present  Secretary  of  the 
Treasury  are  concerned.     I  affirm  again  the  statement  I  have  made,  that 
a  proposition  of  this  kind  has  never  been  recommended  to  either  House 
of  Congress  by  any  Department  of  the  Government  from  its  organization 
The  report  of  the  Secretary  of  the  Treasury,  made  at  the  opening  of  the 
Session,  contains  no  such  recommendation." 


44 

Mr.  Pendleton  contended  that  the  bill,  if  passed,  would  impair 
the  obligation  of  past  as  well  as  of  future  contracts,  and  that  it 
would  make  it  illegal  to  make  a  contract  for  dealing  in  gold  or 
silver  coin,  for  the  reason  that  these  legal  tender  notes  might  be 
tendered  in  payment  of  coin  contracts.  He  insisted  that  there 
was  no  express  power  granted  in  the  Constitution  to  make  United 
States  notes  lawful  money  and  a  legal  tender  in  payment  of  debts, 
and  that  the  power  "to  regulate  commerce"  gave  no  such  power. 
He  then  said: 

"The  gentleman  from  New  York  (Mr.  Spaulding),  in  his  argument  yes 
terday,  deduced  this  power  from  the  general  powers  of  the  Government. 
He  told  us  that  Congress  had  power  to  lay  and  collect  taxes ;  to  raise  and 
support  armies,  to  provide  and  maintain  a  navy,  and  that  all  power  neces 
sary  to  effectuate  these  purposes  was  expressly  given  by  the  general  grant 
of  the  Constitution.  If  I  should  admit  his  statement  in  the  very  language 
in  which  he  has  made  it,  am  I  not  entitled  to  ask  whether  he  has  shown 
us  any  legitimate  connection  between  making  these  notes  a  legal  tender 
and  the  power  to  raise  an  army  ?  Might  I  not  ask  whether  the  repudia 
tion  of  the  obligations  of  the  Government  to  pay  its  interest  is  a  legiti 
mate  means  for  providing  and  sustaining  a  navy  ?  Whether  impairing  the 
obligations  of  contracts  between  private  individuals  throughout  the  coun 
try,  will  in  any  degree  assist  the  Government  in  its  great  duty  in  laying 
and  collecting  taxes  ?  We  had  no  demonstration  of  the  necessity  or  pro 
priety  of  these  means  to  accomplish  those  ends. 

The  gentleman  spoke  quite  at  large  in  reference  to  the  sovereign  power 
of  the  Government.  He  told  us  that  this  power  was  not  prohibited  in  the 
Constitution.  He  told  us  that  in  times  of  great  emergency  every  thing 
may  be  done  except  that  which  is  prohibited ;  and  he  read  an  argument 
from  the  Attorney  General  which  concludes  as  it  began,  with  the  proposi 
tion  that  such  a  power  is  not  prohibited  to  Congress.  Sir,  I  repudiate 
this  whole  idea.  I  think  it  has  no  solid  foundation  in  the  Constitution. 

When  I  come  to  examine  the  powers  of  Congress  according  to  the 
principles  of  interpretation  to  which  I  adhere,  I  look  to  the  grants  of  the 
Constitution.  I  find  no  grant  of  this  power  in  direct  terms,  or,  as  I  think, 
by  fair  implication.  It  is  not  an  accidental  omission :  it  is  not  an  omission 
through  inadvertency.  It  was  intentionally  left  out  of  the  Constitution, 
because  it  was  designed  that  the  power  should  not  reside  in  the  Federal 
Government." 

MR.  PENDLETON  continued  his  argument  at  great  length  against 
the  Constitutional  power  of  the  government  to  issue  legal  tender 
notes  to  circulate  as  money.  He  quoted  from  Story,  Madison, 
Hamilton,  Calhoun,  and  made  long  extracts  from  Mr.  Webster's 
speeches  which  were  made  while  the  government  was  on  a  peace 
footing,  denying  the  power  of  the  Government  to  issue  currency 
and  make  it  a  legal  tender.  He  insisted  that  no  State,  and  that 
even  Congress  itself  could  not  make  anything  but  gold  and  silver 
coin  a  legal  tender  in  payment  of  debts.  That  the  language  of 


45 

the  Constitution,  and  the  weight  of  authorit}-,  it  seemed  to  him, 
settled  the  question  that  Congress  had  not  the  power  to  do  that 
which  it  is  proposed  shall  be  done  by  the  provisions  of  this  bill. 
He  concluded  as  follows: 

"Let  gentlemen  heed  this  lesson  of  wisdom.  Let  them,  if  need  be,  tax 
the  energies  and  wealth  of  the  country  sufficiently  to  restore  the  credit  of 
the  Government.  Let  them  borrow  whatever  money  in  addition  may  be 
necessary — borrow  to  the  full  extent  that  may  be  necessary — and  let  us 
adhere  rigidly,  firmly,  consistently,  persistently,  and  to  the  end,  to  the 
principle  of  refusing  to  surrender  that  currency  which  the  Constitution 
has  given  us,  and  in  the  maintenance  of  Avhich  this  Government,  has 
never,  as  yet,  for  one  moment  wavered." 

The  letter  of  Secretary  Chase  of  the  22d  inst.  was  regarded  by 
a  majorit}1-  of  the  Committee  of  Ways  and  Means  and  many 
Members  of  the  House,  as  non-committal  on  the  legal  tender 
clause  of  the  bill,  and  many  believed  that  when  pressed  to  a 
decision,  he  would  declare  against  its  constitutionality.  In  order 
to  obtain  the  opinion  of  the  Secretary  more  fully,  MR.  CORNING 
offered  a  resolution  in  the  Committee  of  Ways  and  Means,  which 
was  adopted,  referring  the  bill  (No.  240)  to  the  Secretary,  and 
requesting  him  to  communicate  to  the  Committee  at  as  early  a 
day  as  possible,  his  opinion  as  to  the  propriety  and  necessity  of 
its  immediate  passage  by  Congress.  After  considerable  delay  the 
Secretary  sent  to  the  Committee  of  Wa}Ts  and  Means  the  follow 
ing  reply: 

EXTRACT  FROM  A  LETTER  OF  THE   SECRETARY  OF    THE  TREASURY  TO  THE  COM 
MITTEE  OF   WAYS   AND  MEANS, 

TREASURY  DEPARTMENT,  Jan.  29,  1862. 

SIR:  I  have  the  honor  to  acknowledge  the  receipt  of  a  resolution  of  the 
Committee  of  Ways  and  Means,  referring  to  me  House  bill  iN"o.  240,  and 
requesting  my  opinion  as  to  the  propriety  and  necessity  o'f  its  immediate 
passage  by  Congress. 

The  condition  of  the  Treasury  certainly  needs  immediate  action  on  the 
subject  of  affording  provision  for  the  expenditures  of  the  Government, 
both  expedient  and  necessary.  The  general  provisions  of  the  bill  submit 
ted  to  me,  seems  to  me  well  adapted  to  the  end  proposed.  There  are, 
however,  some  points  which  may,  perhaps,  be  usefully  amended. 

The  provision  making  United  States  notes  a  legal  tender  has  doubtless 
been  well  considered  by  the  committee,  and  their  conclusion  needs  no  sup 
port  from  any  observation  of  mine.  I  think  it  my  duty,  however,  to  say, 
that  in  respect  to  this  provision  my  reflections  have  conducted  me  to  the 
same  conclusions  they  have  reached.  It  is  not  unknown  to  them  that  I  have 
felt,  nor  do  I  wish  to  conceal  that  I  now  feel,  a  great  aversion  to  making 
anything  but  coin  a  legal  tender  in  payment  of  debts.  It  has  been  my 
anxious  wish  to  avoid  the  necessity  of  such  legislation.  It  is,  however, 
at  present  impossible,  in  consequence  of  the  large  expenditures  entailed 


46 

by  the  war,  and  the  suspension  of  the  banks,  to  procure  sufficient  coin  for 
disbursements ;  and  it  has,  therefore,  become  indispensably  necessary  that 
we  should  resort  to  the  issue  of  United  States  notes.  The  making  them  a 
legal  tender  might,  however,  still  be  avoided,  if  the  willingness  manifested 
by  the  people  generally,  by  railroad  companies,  and  by  many  of  the  bank 
ing  institutions,  to  receive  and  pay  them  as  money  in  all  transactions, 
were  absolutely  or  practically  universal;  but,  unfortunately,  there  are 
some  persons  and  some  institutions  which  refuse  to  receive  and  pay  them, 
and  whose  action  tends  not  merely  to  the  unnecessary  depreciation  of  the 
notes,  but  to  establish  discriminations  in  business  against  those  who,  in 
this  matter,  give  a  cordial  support  to  the  Government,  and  in  favor  of 
those  who  do  not.  Snch  discriminations  should,  if  possible,  be  prevented ; 
and  the  provision  making  the  notes  a  legal  tender,  in  a  great  measure  at 
least,  prevents  it,  by  putting  all  citizens,  in  this  respect,  on  the  same  level, 
both  of  rights  and  duties. 

The  committee,  doubtless,  feel  the  necessity  of  accompanying  this  meas 
ure  by  legislation  necessary  to  secure  the  highest  credit  as  well  as  the 
largest  currency  of  these  notes.  This  security  can  be  found,  in  my  judg 
ment,  by  proper  provisions  for  funding  them  in  interest-bearing  bonds ; 
by  well-guarded  legislation  authorizing  banking  associations  with  circula 
tion  based  on  the  bonds  in  which  the  notes  are  funded ;  and  by  a  judicious 
system  of  adequate  taxation,  which  will  not  only  create  a  demand  for  the 
notes,  but— by  securing  the  prompt  payment  of  interest— raise  and  sus 
tain  the  credit  of  the  bonds.  Such  legislation,  it  may  be  hoped,  will 
divest  the  legal  tender  clause  of  the  bill  of  injurious  tendencies,  and  se 
cure  the  earliest  possible  return  to  a  sound  currency  of  coin  and  promptly 
convertible  notes. 

I  beg  leave  to  add,  that  vigorous  military  operations  and  the  unsparing 
retrenchment  of  all  necessary  expenses,  will  also  contribute  essentially  to 

this  desirable  end. 

********  *  * 

I  have  the  honor  to  be,  with  very  great  respect,  yours  truly, 

S.  P.  CHASE. 
Hon.  THADDEUS  STEVENS,  Chairman. 

LETTER  FROM  HON.  S.  P.  CHASE,  SECRETARY  OF  THE  TREASURY. 

TRE  ASURYr  DEPARTMENT,  Jan.  30,  1862. 

MY  DEAR  SIR— It  was  impossible  to  get  my  answer  ready  before  yester 
day  afternoon,  when  it  was  sent  to  the  Chairman  of  the  Committee ;  the 
messenger  boy  instructed  to  deliver  it  to  Mr.  Stevens  or  yourself.  The 
House  having  adjourned,  he  left  it,  he  says,  for  you  at  the  National  Hotel 
instead  of  at  Mr.  Steven's  lodgings. 

Had  I  been  aware  that  the  part  read  to  you  would  have  been  acceptable 
as  an  extract,  (to  insert  in  your  speech, )  I  would  have  sent  it  earlier  in 
advance  of  completing  the  answer. 

I  read  your  speech  carefully  last  night.  It  seems  to  me  to  need  no 
change.  You  do  not  attach,  I  see,  so  much  importance  as  I  do  to  the 
Banking  Act  as  a  measure  of  relief;  nor  so  much  as  I  am  confident  you 
will  upon  reflection.  I  confess  too,  that  I  was  a  little  disappointed  in  be 
ing  merely  let  off  without  censure  when  I  thought  myself  entitled  to 
some  credit.  My  two  first  loans  were  negotiated  considerably  above  the 
market  rate,  and  the  last  at  a  rate  almost  equal  at  the  time,  and  below, 
while  the  market  almost  immediately  afterwards  fell. 

Your  friend,  S.  P.  CHAgE. 

Hon.  E.  G.  SPATJLDING,  House  of  Representatives. 


47 

LETTER  OF  JOHN  A.  STEVENS,  PRESIDENT  OF  BANK  OF  COMMERCE. 


YORK,  Jan.  29,  1862. 
MY  DEAR  SIR—  I  beg  to  offer  you  my  thanks  for  your  able  exposition  of 
the  financial  affairs  of  the  Government.  It  is  clear  that  there  are  but  the 
alternatives  you  state  to  obtain  any  substantial  relief—  the  one,  to  flood 
the  market  with  the  long  stocks,  submit  to  the  very  great  depression  in 
the  price,  and  abide  the  consequences  :  a  great  augmentation  of  the  public 
debt,  and  ruin  to  many  of  the  warmest  supporters  of  the  Government  ; 
the  other,  for  the  present  to  issue  demand  notes,  making  them  a  legal  tender 
in  order  to  enable  you  to  use  them.  No  other  plans  have  been,  or  in  my  opin 
ion  can  be  devised,  I  have  long  entertained  and  freely  expressed  these 
views,  here  and  in  Washington.  Even  if  an  attempt,  more  or  less  suc 
cessful,  had  been  made  at  the  first  to  sell  the  long  stock,  yet,  with  the 
profligate  expenditure  since  made  to  such  fearful  amounts,  "to  this  com 
plexion  had  we  come  at  last."  It  is  idle  to  look  back,  but  had  there  been 
economy  in  the  great  departments  of  expenditure  from  the  beginning,  in 
spiring  full  public  confidence  in  their  able  and  honest  management,  it 
may  be  questioned  if  the  necessary  funds  could  not  have  been  provided 
without  making  irredeemable  paper  money.  The  war  Avould  have  been 
shorter,  the  patriotism  of  the  whole  people  fully  sustained,  and  foreign 
nations  shown  that  this  Government  could  not  be  divided. 

I  am,  dear  sir,  respectfull}"  and  truly  yours, 

JOHN  A.  STEVENS. 
Hon.  E.  G.  SPAULDING,  AVashington. 

LETTER  FROM  HON.  GEORGE  OPDYKE,  MAYOR  OF  NEW  YORK. 

MAYOR'S  OFFICE,  NEW  YORK,  Feb.  3,  1862, 

MY  DEAR  SIR—  Accept  my  kind  thanks  for  your  note  of  yesterday,  and 
also  my  apology  for  not  having  sooner  expressed  the  gratification  I  felt 
on  reading  your  very  able  and  statesmanlike  speech  on  the  national 
finances.  That  speech  has  received,  as  it  deserved,  the  hearty  approval  of 
every  one  who  fully  appreciates  the  imminent  danger  we  are  in  of  a  col 
lapse  of  the  public  credit.  If  the  present  financial  embarrassments  of  the 
Government  should  be  aggravated  by  military  disasters,  or  threatened 
foreign  intervention,  it  might  precipitate  a  panic  that  w^ould  so  depress 
the  public  securities,  that  it  would  be  difficult  to  obtain  supplies  for  the 
army,  and  thus  arrest  the  further  prosecution  of  the  war.  The  only  safe 
way  of  avoiding  this  danger  is  to  promptly  pass  the  bill  you  have  intro 
duced  and  advocated  so  ably.  I  shall  not  fail  to  give  you  whatever  aid  I 
can.  I  have  tried  in  several  instances  to  bring  Mr.  Bryant  and  Mr.  Greeley 
over  to  our  faith,  bufthus  far  without  success. 

I  remain,  dear  sir,  very  truly  yours, 

GEORGE  OPDYKE. 

COMMONWEALTH  BANK. 

PHILADELPHIA,  Feb.  14,  1862. 

MY  DEAR  SIR—  I  have  read  your  speech  on  the  finances  of  the  nation 
with  the  liveliest  interest.    It  is  at  once  clear,  forcible,  argumentative 
and  conclusive,  worthy  alike  of  a  financier,  a  statesman,  and  a  patriot. 
Very  truly  yours,  E.  MOPiBIS. 

Hon.  E.  G.  SPAULDING. 


48 

LETTER  FROM  STEPHEN  COLWELL,  ESQ. 

PHILADELPHIA,  Jan.  30,  1862. 
Hon.  E.  G.  SPAULDING,  House  of  Representatives,  Washington. 

DEAR  SIR — I  have  just  read  your  very  able  and  statesmanlike  exposi 
tion  of  our  public  finances  and  our  financial  policy  during  the  war,  with 
a  satisfaction  I  cannot  refrain  from  expressing  to  you  by  letter. 

You  have  grasped  the  subject  strongly  and  comprehensively,  as  well  as 
practically.  I  can  not  doubt  that  your  views  will  prevail.  I  trust  you 
will  now  extend  the  same  kind  of  effort  to  accomplish  some  harmonious 
action  between  the  Associated  Banks  and  the  Government.  I  believe  that 
these,  and  other  leading  banks  can,  by  the  aid  of  the  Treasury  and  by  con 
cert  in  emergencies,  keep  the  United  States  notes  or  currency  at  par ;  that 
is  at  par  less  only  the  special  premium  on  gold,  which  will  not  be  greater 
than  now  if  the  Treasury  currency  is  well  managed.  The  regular  circu 
lation  of  paper  currency  will  absorb  in  no  very  long  period  the  whole 
$200,000,000,  and  keep  that  amount  moving.  But  as  currency  in  the  chan 
nels  of  business  necessarily  at  times  gorges  in  particular  places,  and  de 
preciates  at  once  if  the  holders  are  not  relieved,  such  occasions  should  not 
only  be  watched  by  the  fiscal  agents  of  the  Government,  but  the  proper 
remedy  should  be  applied.  It  would  cost  the  Treasury  no  sum  worth 
mentioning,  if  the  banks  would  enter  into  the  plan  heartily,  to  keep  their 
currency  in  such  credit  that  it  would  perform  with  complete  success  every 
function  of  a  sound  currency.  According  to  my  view,  the  banks  are  deep 
ly  interested  in  keeping  up  the  credit  of  those  notes.  The  continued  de 
mand  for  them  created  by  the  loans,  by  the  payment  of  debts  at  banks, 
and  the  payment  of  taxes,  will  create  a  rapid  circulation  and  an  absorbing 
power,  which  will  enable  the  Government  to  re-issue  the  whole  amount 
several  times  a  year.  But  there  can  be  no  doubt  that  an  average  of  one 
hundred  millions  will  remain  so  prominently  in  the  channels  of  business 
as  seldom  to  revisit  the  Treasury.  If  the  banks  will  lend  their  aid  effect 
ively  to  support  their  circulation  it  is  not  likely  that  any  further  issue 
will  be  needed,  if  they  don't,  they  must  depreciate,  and  further  issue  will 
be  inevitable,  if  the  war  continues.  Even  the  banks  should  be  willing  to 
acknowledge,  that  whatever  their  opinion  about  the  propriety  of  issuing 
this  currency,  the  whole  financial  policy  of  the  war  and  commercial  in 
terests  of  the  country,  will  depend  very  much  on  its  management.  They 
should  accept  the  necessity  and  make  the  best  of  it ;  and  they  can  make  a 
very  good  thing  for  themselves  by  making  the  best  of  it.  There  can  be 
no  doubt  that  the  city  banks  can  enlarge  their  discounts  by  the  use  of  the 
United  States  notes  beyond  what  they  could  safely  do  upon  their  own 
circulation.  But  I  regard  their  hearty  co-operation  in  sustaining  this 
issue  which  you  have  so  well  justified,  as  so  important,  that  I  think  it 
would  be  well  worth  while  for  the  Treasury  to  pay  them  for  the  sort  of 
services  they  can  render.  I  contributed  an  editorial  on  this  subject  to  the 
North  American,  which  I  send  you.  If  your  speech  is  to  appear  in  pamph 
let  form  please  send  me  one.  I  send  you  also  an  article  in  the  Banking 
Magazine  fo?  January,  1862,  on  the  subject  of  banks  and  the  Treasury.  Be 
good  enough  to  present  my  respects  to  Mr.  Horton,  of  your  committee, 
who  is  an  old  acquaintance  of  mine. 

With  great  respect,  very  truly  yours, 

STEPHEN  COLWELL. 


49 

EXTRACT  FROM  A  LETTER  OF  M.  S.  HAWLEY,  ESQ. 

BUFFALO,  Jan.  21,  1862. 

DEAR  SIR — I  suppose  of  course  a  large  issue  of  demand  notes  for  circu 
lation  will  be  authorized,  receivable  for  all  dues  and  made  a  legal  tender ; 
and  sufficient  taxation  to  sustain  the  credit  of  all  such  issues  and  of  the 
Government  bonds.  I  see  no  other  method  so  economical  and  effective. 

Very  respectfully  yours, 

M.  S.  HAWLEY. 

EXTRACT  FROM  A  LETTER  OF  J.  H.  VAN  ANTWERP,  ESQ.,  OF  THE  STATE  BANK, 

ALBANY. 

ALBANY,  Feb,  8,  1862. 

DEAR  SIR— Accept  my  thanks  for  a  copy  of  your  speech  on  the  national 
finances.  The  demand  notes,  in  addition  to  the  legal  tender,  need  only  to 
be  fortified  by  a  sinking  fund  yearly  of  $10,000,000,  derived  from  taxation, 
to  every  $100,000,000  of  notes  issued,  to  make  them  pass  equal  to  coin. 

Yours  truly, 

J.  H.  VAN  ANTWERP. 

LETTER  FROM  HON.  ROBERT  DENNISTON,  LATE  COMPTROLLER  OF  NEW  YORK. 

SALISBURY  MILLS,  Orange  Co.,  N.  Y.,  Jan.  30,  1862. 
HON.  E.  G.  SPAULDING. 

DEAR  SIR — I  have  read  your  financial  speech  (as  reported  in  the  Tri 
bune}  twice  over  with  great  interest.  The  necessity  for  such  measures  is 
greatly  to  be  regretted,  but  I  do  not  see  with  the  light  I  have,  how  they 
are  to  be  avoided.  In  our  national  exigency,  determined  boldness,  both 
in  civil  and  military  affairs,  will  be  worth  a  mint  of  money  to  us. 

Please  send  me  your  speech  for  preservation,  when  printed  in  pamphlet 
form. 

With  great  respect,  your  obedient  servant, 

ROBERT  DENNISTON. 

LETTER  OF  C.  H.  RUSSELL,  VICE   PRESIDENT  OF  THE  BANK  OF  COMMERCE. 

NEW  YORK,  Jan.  29,  1862. 

MY  DEAR  SIR — I  have  just  read  your  speech  as  published  to-day  in  the 
Times,  it  appears  to  me  a  very  fair  and  clear  exposition  of  the  present 
financial  condition  of  the  Government,  its  necessities,  its  resources,  and 
the  emergency  which  now  demands  the  immediate  passage  of  the  bill  re 
ported  by  the  Committee  of  Ways  and  Means.  The  exigency  of  the 
Government  to  which  I  referred  recently  before  that  Committee,  to  justify 
the  legal  tender  of  the  notes,  I  think  is  now  reached,  and  wre  have  no 
choice  of  any  other  measure  as  good  as  you  propose.  But  protect  the 
issue  of  this  currency  by  limitation  of  its  amount,  by  large  taxation,  and 
be  sure  to  require  by  amendment  that  the  payment  of  interest  by  the  Gov 
ernment  shall  be  certainly  paid  in  coin  on  all  its  public  debts. 

In  haste,  yours  truly, 

C.  H.  RUSSELL. 

P.  S. — In  some  quarters  are  suggestions  not  to  receive  these  notes  from 
customers.  This  is  wrong.  Such  a  proceeding,  or  to  make  any  exception 
against  them  as  law/id  money  of  the  United  States,  would  affix  a  taint  and 
affect  the  public  confidence  in  them. 


50 

ELEAZER  LORD,  LATE  PRESIDENT  OF  THE  NEW  YORK  AND  ERIE  RAILROAD. 

PiERMONT,  Jan.  29,  1862. 
HON.  E.  G.  SPAULDING,  M.  C. 

DEAR  SIR — I  beg  to  congratulate  you  on  your  lucid,  forcible,  and  com 
prehensive  opening  of  the  debate  on  the  legal  tender  Treasury  note  bill. 
It  is  unanswerable,  and  I  trust  will  issue  in  an  early  triumph.  I  only 
wish  the  sum  proposed  was  larger,  so  as  to  extinguish  all  hopes  of  national 
bonds  being  forced  on  the  market  and  sacrificed.  T  think  there  will  be  a 
struggle  in  certain  quarters  to  withdraw  them  from  circulation  and  turn 
them  into  bonds  on  interest.  The  people  would  do  that  gradually  with 
out  reducing  the  circulation  too  much,  were  there  plenty  more  expected ; 
and  with  a  discretion  for  a  larger  sum  the  inimical  parties  could  do  no 
harm. 

Should  your  speech  be  printed  in  pamphlet  form,  which  I  hope  it  will, 
please  favor  me  with  one  or  more. 

Respectfully,  &c.,  ELEAZER  LORD. 

LETTER  OF  HON.  E.  S.  PROSSER. 

BUFFALO,  Feb.  7,  1862. 
HON.  E.  G.  SPAULDING,  Washington,  D.  C. 

DEAR  SIR— I  thank  you  for  a  printed  copy  of  your  speech  on  the  finances 
of  the  country,  received  this  morning ;  I  had  read  it  in  the  paper  before 
with  great  interest  and  entire  approval,  but  desire  this  copy  for  preserva 
tion.  Whilst  all  loyal  citizens  must  regret  the  necessity  which  compels 
the  Government  to  suspend  specie  payments  and  make  its  own  demand 
notes  a  lawful  tender  instead,  I  am  quite  unable,  after  very  considerable 
thought,  to  suggest  any  other  measure  of  relief,  which  I  think  would 
answer  the  purpose  so  promptly,  or  so  well ;  hence,  I  hope  the  bill  as  re 
ported  by  the  committee  will  speedily  become  a  law,  and  this  is  I  think 
quite  the  general  wish  here.  As  the  Spring  approaches,  anxiety  increases 
for  a  vigorous  prosecution  of  the  war  to  a  conclusion ;  for  sometime  or 
other,  not  very  remote,  necessity  will  compel  at  least  a  large  decrease  in  our 
land  and  naval  forces;  $500,000,000  annually,  can  and  will  be  paid  cheer 
fully  awhile,  but  I  need  not  say  to  you  that  it  cannot  be  very  long;  so  it 
behooves  the  Government  to  act  with  all  practicable  energy  to  end  the  re 
bellion  by  any  means  in  its  power,  in  the  very  shortest  time  it  can  be  done. 
I  hope  wre  shall  come  out  of  the  conflict  speedily  and  triumphantly ;  and 
that  all  the  States  may  be  again  united  under  the  present  Constitution ; 
still  most  of  the  slave  states,  except  upon  the  border,  seem  almost  hope 
lessly  estranged,  and  will  not,  I  fear,  ever  again,  with  their  present  people, 
yield  obedience  to  the  fundamental  law  of  the  land  and  the  acts  of  Con 
gress,  unless  they  know  the  penalty  for  treason  henceforth  is  to  be  rigidly 
enforced,  and  that  the  power  of  the  Government  is  quite  equal  to  capture 
the  leaders  of  the  rebellion  by  hundreds  and  thousands,  and  are  determined 
to  do  it,  and  to  execute  them  as  fast  as  captured,  unless  they  throw  down  their 
arms  and  disband,  and  return  to  loyalty.  Can  it  be  possible  the  Rebel 
leaders  would  long  hold  out  against  such  a  proclamation,  after  they  saw 
that  it  was  the  intention  of  the  Government  to  fulfil  it  to  the  letter,  and 
they  were  virtually  surrounded  by  a  superior  force. 

Yours  truly,  E.  S.  PROSSER. 


51 

LETTER  OF  GEO.  B.  BUTLER,  OF  THE  HOUSE  OF  A.  T.  STEWART  &  CO.,  NEW  YORK. 

NEW  YORK,  Jan.  30,  1862. 

MY  DEAR  SIR— I  send  you  the  4th  of  a  series  of  articles  written  to  show 
that  the  bills  of  the  Government  should  be  a  legal  tender.  I  belong  to 
the  creditor  class,  but  my  interest  in  the  Government  absorbs  all  others. 
In  my  view  the  war  cannot  be  conducted  except  on  this  plan.  I  would 
pay  the  interest  in  gold  and  silver  and  lay  heavy  taxes.  There  should  be 
$100,000,000  of  demand  notes  of  $1000,  bearing  5  per  cent,  interest. 

Yours,  very  truly,  GEO.  B.  BUTLER. 

LETTER  FROM  T.  W.  OLCOTT,  ESQ.,  MECHANICS*  AND  FARMERS'  BANK. 

ALBANY,  Jan.  31,  18G2. 
HON.  E.  G.  SPAULDING. 

DEAR  SIR— I  have  read  your  well  constructed  argument  on  national 
finances,  and  the  issue  of  Treasury  notes  made  a  legal  tender.  I  do  not 
suppose  that  a  loan  can  be  made,  and  I  regard  this  issue  of  Treasury  notes 
the  only  adequate  measure  for  sustaining  the  credit  of  the  Treasury  and  the  well 
being  if  not  the  very  existence  of  the  Government.  Money  must  be  had  or  the.  war 
cannot  be  successfully  prosecuted. 

This  measure  will  secure  means,  no  other  will  except  at  ruinous  sacrifices.  It 
is  not  a  debatable  question.  Ihe  struggle  is  for  life.  The  knife  is  at  our  throat. 
We  must  strike  with  the  most  available  weapon,  and  leave  theory  for  a  more  con 
venient  season.  Of  course  you  will  pass  a  tax  law.  The  people  will  hail 
it,  and  it  will  inspire  confidence  in  our  public  securities.  I  had  hoped  that 
you  would  authorize  funding  at  4  or  5  years  in  an  8  per  cent,  stock,  and 
20  years  in  a  6  or  Q%  per  cent,  stock.  The  short  8  per  cent,  stock  would 
tempt  to  a  large  amount  of  funding,  and  when  that  short  period  expires, 
it  is  to  be  hoped  that  the  Government  can  borrow  at  5  per  cent, 

We  want  to  encourage  funding  so  as  to  prevent  a  redundant  currency, 
and  to  prepare  the  way  for  possible  if  not  probable  further  issues. 
I  have  the  honor  to  be,  Your  Obedient  Servant, 

THOMAS  W.  OLCOTT. 

OFFICE  OF  THE  COLUMBIAN  INSURANCE   COMPANY, 

XEW  YORK,  Jan,  31,  1862. 
HON.  E.  G.  SPAULDING,  Washington,  D.  C. 

DEAR  SIR — I  have  read  your  able  exposition  of  the  condition  of  the 
national  finances ,  and  the  bill  which  you  reported  to  authorize  the  issue 
of  $150,000,000  of  demand  notes,  and  I  beg  leave  to  express  the  opinion, 
that  there  is  no  other  means  by  which  the  Government  can  escape  the  ut 
ter  ruin  of  their  credit,  than  the  immediate  passage  of  the  bill,  and  a  bill 
to  raise  an  amount  of  revenue  which  shall  render  the  prompt  payment  of 
interest  on  all  their  loans  beyond  contingency.  Should  the  passage  of  this 
bill  be  delayed  until  the  banks  have  paid  their  last  installment  to  the 
Government,  and  the  banks  should  refuse  to  receive  the  demand  notes, 
and  pay  them  out,  they  would  of  course  depreciate  to  an  extent  sufficient 
to  damage  the  credit  of  the  Government  essentially.  If  the  experience  of 
a  life,  not  now  short,  is  of  any  value,  I  say  unhesitatingly,  that  this  is  the 
most  critical  period  in  our  history  within  my  knowledge.  Those  in  power 
must  take  the  responsibility  and  do  the  needful  instantly,  or  the  consequences 
may  be,  and  I  think  will  be  terrific.  As  to  paying  in  gold  during  the  war, 
it  is  utterly  and  totally  impracticable,  and  the  idea  of  doing  so  should  at 
once  be  discarded.  After  the  present  emergency  is  provided  for,  I  trust 


the  bill  for  banking  on  the  Government  stock  will  be  passed.  The  plan 
will  be  approved  by  nearly  all  the  intelligent  community  when  once 
adopted,  and  is  now  by  a  large  majority  of  the  men  of  wealth  and  influ 
ence,  so  far  as  I  am  informed.  With  apologies  for  trespassing  upon  your 
valuable  time, 

I  am,  your  obedient  servant, 

THOMAS  LORD. 

POSTPONEMENT  OF  THE  SPECIAL  ORDER. 

On  Thursday,  the  30th  inst. ,  MR.  STEVENS  moved  to  postpone 
the  special  order — the  Treasury  note  bill — until  to-morrow,  for 
the  purpose  of  going  into  the  Committee  of  the  Whole  on  the 
Army  bill.  The  motion  was  agreed  to.  And  on  Friday,  the  31st 
inst,  he  again  moved  to  postpone  the  Treasury  note  bill  until 
Monday,  the  3rd  of  February,  which  was  agreed  to  by  the  House. 

On  Monday,  the  3rd  of  February,  Mr.  Vallandigham  offered  a 
modification  of  his  substitute  for  the  bill,  for  the  purpose  of  hav 
ing  it  printed  for  examination.  This  substitute  will  be  found 
printed  at  length  in  the  Congressional  Globe,  page  614. 

MR.  ROSCOE  CONKLING — With  the  permission  of  the  gentleman 
from  Ohio,  I  desire  to  submit  for  the  same  purpose,  the  following, 
which  I  propose  to  offer,  at  the  proper  time,  as  a  substitute  for 
the  whole  bill.  Congressional  Globe,  page  615. 

MR.  VALLANDIGHAM'S  SPEECH. 

MR.  VALLANDIGHAM  being  entitled  to  the  floor,  addressed  the 
Committee  of  the  whole  House  for  one  hour,  in  favor  of  his  sub 
stitute,  and  in  opposition  to  the  legal  tender  clause  in  the  original 
bill.  His  speech  will  be  found  reported  at  length  in  the  appendix 
to  the  Congressional  Globe,  pages  42,  43,  44  and  45. 

He  commenced  by  saying : 

"It  has  been  my  habit,  Mr.  Chairman,  to  premeditate,  whenever  pre 
meditation  was  possible,  whatever  I  have  had  to  say  in  this  House ;  for  no 
man  has  a  right,  in  my  judgment,  to  obtrude  his  immature  thoughts  and 
opinions  upon  a  deliberative  assembly.  ******* 

u  I  propose  to-day  to  discuss  the  subjects  involved  in  this  bill  to  the  best 
of  my  ability,  and  with  becoming  candor  and  freedom,  and  I  may  add 
earnestness  too ;  for  I  have  the  profoundest  conviction  of  their  incalcul 
able  importance  to  the  interests,  present  and  future,  of  the  United  States, 
and  of  the  people  of  this  wThole  continent.  Nor  am  I  to  be  deterred  from 
a  faithful  discharge  of  my  duty  by  the  consciousness  that  my  voice  may 
not  be  hearkened  to  here,  or  in  the  country,  because  of  the  continued,  per 
sistent,  but  most  causeless  and  malignant  assaults  and  misrepresentations, 
.to  which  for  months  past,  I  have  been  subjected.  Sir,  I  am  not  here  to 
reply  to  them  to-day.  Neither  am  I  to  be  driven  from  the  line  of  duty  by 
them.  "Strike — but  hear."  Whatever  a  silenced  or  mendacious  press, 


53 

outside  of  this  House  may  choose  to  withhold,  or  to  say,  no  man  who  is 
fit  to  be  a  member  of  this  House,  will  allow  his  speech  or  his  votes,  or  his 
public  conduct  here,  to  be  controlled  by  his  personal  hates  or  prejudices. 
Sir,  I  recant  nothing,  and  would  expunge  nothing  from  the  record  of  the 
past,  so  far  as  I  am  concerned,  But  my  path  of  duty  now,  as  a  Represen 
tative,  is  as  clear  as  the  sun  at  broad-noon.  THE  SHIP  OF  STATE  is  UPON 
THE  ROCKS.  I  was  not  the  helmsman  who  drove  her  there;  not  had  I 
part  or  lot  in  directing  her  course.  But  now,  when  the  sole  question  is, 
how  shall  she  be  rescued  ?  I  will  not  any  longer,  or  at  least  just  now  en 
quire  who  has  done  the  mischief. 

*  *  *  *  I  do  not  agree,  Mr.  Chairman,  with  the  gentleman 
who  has  opened  this  debate,  (Mr.  Spaulding,)  that  this  bill  is  a  war  mea 
sure.  Certainly,  sir,  it  has  been  forced  upon  us  by  the  war,  but  if  peace 
were  restored  to-morrow,  these  $100,000,000  would  be  just  as  essential  to 
the  "  public  credit  as  they  are  to-day." 

Mr.  Yallandighain  continued  his  argument  at  great  length.  He 
insisted  that  the  legal  tender  clause  was  unconstitutional,  that  it 
vrsis-a  forced  loan,  and  that  it  would  be  disastrous  and  unjust.  He 
said  no  scheme  of  loan  or  taxation,  or  national  bank,  or  currency, 
or  other  similar  contrivance,  could  be  devised,  and  put  into  opera 
tion  in  time  to  avert  ruin  and  disaster.  The  Government  has  no 
money,  no  gold  and  silver  coin,  which  is  the  only  money  in  the 
world.  He  advocated  Treasury  notes,  without  any  promise  to 
pay  money,  and  without  the  legal  tender  clause,  which  should 
pass  as  currency  from  hand  to  hand,  between  the  Government 
and  its  creditors  and  debtors,  and  be  supported  by  a  nearly  equal 
amount  of  taxes — such  taxes  to  be  received  b}^  the  Government  in 
these  notes. 

He  urged  that  the  experiment  of  forcing  a  paper  currency  upon 
the  country,  was  a  dangerous  experiment,  that  it  would  lead  to 
other  enormous  issues,  gold  and  silver  would  be  banished  from 
circulation,  an  immense  inflation  would  take  place,  "cheap  in 
materials,  easy  of  issue,  worked  by  steam,  signed  by  machinery, 
there  would  be  no  end  to  the  legion  of  paper  devils  which  shall 
pour  forth  from  the  loins  of  the  Secretary."  That  inevitably  there 
would  follow  bloated  currency,  high  prices,  extravagant  specula 
tion,  enormous  sudden  fortunes,  immense  factitious  wealth,  and 
general  insanity. 

He  objected  to  their  being  called  "  United  States  notes"  instead 
of  "  Treasury  notes,"  as  they  had  always  heretofore  been  called, 
and  deprecated  the  idea  that  they  were  likely  to  be  a  permanent 
currency,  or  at  least  until  the  Secretary's  grand  fiscal  machine, 
"his  magnificent  National  Paper  Mill,  founded  upon  the  very 
stock  provided  for  in  this  bill  can  be  put  into  operation."  He 


54 

insisted  that  these  notes  were  not  money,  that  they  would  not 
circulate  as  currency,  would  not  be  taken  as  legal  tenders,  and  in 
discharge  of  judgments,  and  contracts,  and  state  debts,  or  private 
debts,  "  though  you  should  send  them  forth  bearing  ten  times  the 
image  and  superscription — the  fair  face  and  form  of  ABRAHAM 
LINCOLN,  now  president  and  CAESAR  of  the  American  Republic." 
He  urged  the  substitute  presented  by  him  as  follows : 

"  The  fundamental  idea  of  this  substitute  is  to  support  and  float  these 
$150,000,000,  by  nearly  an  equal  amount  of  taxation  and  revenue,  payable 
of  course  in  these  notes.  The  Government  owe  the  people  and  the  peo 
ple  owe  the  Government,  each  $150,000,000,  and  these  notes  are  primarily 
to  be  used  as  a  common  medium  of  payment  between  them.  *  *  *  * 
I  do  not  propose  or  pretend  that  these  notes  are  to  be  convertible  into 
gold  and  silver.  They  are  not  payable  on  demand ;  they  are  not  payable 
to  bearer,  nor  payable  at  all.  They  are  not  to  be  paid,  but  to  circulate  as 
currency  receivable  in  Government  dues,  and  finally  to  be  funded  in 
twenty  year's  stocks.  They  are  not  promises  to  pay,  and  are  not  there 
fore  paper  money.  They  do  not  represent  gold  and  silver,  of  which  the 
Government  has  none.  *  *  The 

United  States  are  to  cease  in  part,  for  a  time,  to  be  a  specie  paying  hard 
money  Government,  I  deplore  it  profoundly.  But  imperious  necessity 
demands  it.  There  is  no  alternative,  no  matter  what  evils  may  follow. 

But  I  utterly  deny,  sir,  the  right  of  the  Federal  Government  to  pro 
vide  a  paper  currency,  intended  primarily  to  circulate  as  money,  and  meet 
the  demands  of  business  and  commercial  transactions,  and  to  the  exclu 
sion  of  all  other  paper.  It  is  not  the  intent  or  object  of  the  substitute  to 
furnish  such  a  currency  for  the  country.  * 

Such,  Mr.  Chairman,  is  the  substitute  which  I  have  submitted.  It  dif 
fers  essentially  from  the  bill.  The  one  relies  on  force,  the  other  upon 
credit;  the  one  looks  to  the  direct  and  despotic  coercion  of  law  and  arms, 
and  the  other  to  the  indirect  and  ordinary  coercion  of  taxes.  *  *  * 

To  my  political  friends  let  me  now  appeal  for  support,  not  only  for  this 
substitute,  but  of  the  taxation  which  must  follow  it,  as  essential  to  the 
maintainahce  of  the  good  faith  and  credit  of  the  Government." 

At  the  conclusion  of  Mr.  VallandighanTS  speech,  Mr.  Hooper, 
of  Mass.,  obtained  the  floor. 

MR.  HOOPER'S  SPEECH* 

MR.  HOOPER—"  The  unusual  exigencies  of  this  country  require  that  we 
should  look  for  other  and  deeper  sources  of  revenue  than  any  to  which  we 
have  heretofore  been  accustomed.  We  are  contending  for  the  maintain- 
ance  of  the  Government,  for  the  preservation  of  the  Union,  and  for  the 
enforcement  of  the  laws,  011  which  depend  the  existence,  as  Avell  as  the 
security  of  property. 

To  insure  our  success  in  this  contest,  great  and  unusual  exertions  have 
already  been  made.  An  enormous  army,  a  powerful  navy,  with  vast 
stores  of  artillery  and  ammunition,  have  been  created.  In  providing  for 
the  sustenance,  comfort,  and  equipment  of  the  Army  and  Kavy,  the  Gov 
ernment  have  been  obliged  to  incur  expenses  far  exceeding  in  magnitude 


55 

any  which  have  been  hitherto  known  in  our  history.  To  continue  them 
in  their  present  state  of  efficiency,  large  additional  sums  must  be  expend 
ed  ;  and  it  now  becomes  the  duty  of  Congress  to  devise  methods  by  which 
these  sums  can  be  obtained  with  the  least  hardship  to  the  people,  and  the 
least  risk  to  the  credit  of  the  Government.  In  considering  the  means  by 
which  this  is  to  be  effected,  it  must  be  remembered  that  it  is  hardly  pos 
sible  for  the  Government  to  raise  money  for  any  purpose  without  occa 
sioning  some  inconvenience  to  individuals.  To  oppose  necessary  mea 
sures,  therefore,  simply  upon  the  ground  that  it  will  injuriously  affect  this 
class  or  that  class  of  the  people,  is  unreasonable.  Parties  interested  may 
endeavor  to  show  that  the  same  objects  can  be  effected  with  less  hardship 
than  by  the  methods  proposed,  or  may  endeavor  to  obviate  any  objection 
able  features,  so  far  as  may  be  consistent  with  the  attainment  of  the  de 
sired  end;  but  they  should  always  remember  that  the  end  aimed  at  must 
be  attained;  that  its  attainment  will  require  individual  sacrifices  in  some 
form,  and  that  it  is  the  part  of  wisdom,  of  patriotism,  and  of  discretion, 
to  submit  to  such  necessary  sacrifices  cheerful!}'  when  called  upon,  and 
not  by  their  opposition  attempt  to  excite  popular  clamour,  and  weaken 
the  public  confidence  in  the  Government,  to  which  they  are  indebted  for 
the  safety  of  their  persons,  and  the  security  of  their  possessions.  Every 
step  which  tends  to  weaken  the  public  credit  has  the  effect  of  rendering 
private  property  more  insecure,  because  it  obstructs  the  Government  in 
procuring  its  necessary  funds  in  the  ordinary  way,  and  may  oblige  it  to 
resort  to  the  arbitrary  modes  of  forced  loans  and  heavier  rates  of  taxation. 
At  this  moment,  therefore,  when  for  the  time  every  hope  of  aid  from  for 
eign  capital  is  idle,  when  the  country  is  compelled  to  look  to  her  own  re 
sources  for  the  means  with  which  to  maintain  her  integrity  and  subdue 
the  rebellion,  not  only  does  every  dictate  of  patriotism,  and  every  enob- 
ling  sentiment  of  humanity,  call  upon  the  capitalists  of  the  country  to 
rally  in  defence  of  the  Government,  but  the  meaner  instincts  of  self-pre 
servation  admonishes  them  to  submit  to  slight  sacrifices  now,  that  they 
may  secure  and  preserve  their  property. 

Three  measures  have  been  considered  in  the  Committee,  which  are,  to 
some  extent,  connected  together,  and  form  a  comprehensive  system  by 
which,  it  is  believed,  the  Government  will  be  enabled  to  procure  the  sums 
necessary  to  the  successful  prosecution  of  the  war;  while,  at  the  same 
time,  the  burden  upon  the  capital  of  the  country  wrill  be  light,  and  the 
public  will  be  benefited  in  some  important  particulars. 

The  first  of  these  measures  is  the  one  now  before  the  House,  by  which 
the  Secretary  of  the  Treasury  is  authorized  to  issue  United  States  notes, 
not  to  exceed  $150.000,000  in  amount  (including  those  authorized  by  pre 
vious  laws),  of  denominations  not  less  than  five  dollars.  They  are  not  to 
bear  interest,  but  are  to  be  issued  and  received  as  money,  convertible,  at  the 
option  of  the  holder,  into  six  per  cent,  stock  of  the  United  States,  the 
principal  and  interest  being  payable  either  here  or  abroad,  and  these  notes 
are  to  be  a  legal  tender. 

The  second  measure  consists  of  a  tax  bill,  which  shall,  with  the  tariff  on 
imports,  insure  an  annual  revenue  of  at  least  $150,000,000. 

The  third  is  :i  national  banking  law,  which  will  require  the  deposit  of 
United  States  stock  as  security  for  the  bank  notes  now  circulated  as  cur 
rency. 

In  order  more  fully  to  understand  and  more  easily  to  meet  any  objec 
tions  which  may  be  urged  against  the  first  of  these  measures,  being  the 


56 

one  now  occupying  the  attention  of  the  House,  it  will  be  desirable  to  no 
tice  the  other  two,  which  are  designed  to  be  more  permanent  in  their 
character.,  and  upon  the  expected  results  of  which  the  present  measure  is 
in  some  degree  based." 

MR.  HOOPER  here  explained  the  various  modes  of  the  proposed 
taxation,  by  which  the  credit  of  the  government  was  to  be  sup 
ported,  and  also  went  into  a  full  explanation  of  the  National  Cur 
rency  Bank  bill  which  had  been  prepared,  and  the  manner  in 
which  the  government  bonds  would  be  absorbed  by  the  banks,  as 
soon  as  the  bill  should  go  into  operation.  He  then  proceeded  as 
follows  : 

"  The  levying  of  the  contemplated  tax,  the'proper  inauguration  of  the 
new  banking  scheme,  and  the  successful  negotiation  of  a  new  loan,  are 
matters  that  will  require  time.  In  the  meanwhile,  the  Treasury  is  com 
paratively  empty,  and  the  demands  upon  the  government  are  numerous 
and  pressing.  To  enable  the  government  to  support  itself  during  this  in 
terval  of  time,  and  to  facilitate  the  negotiation  of  their  loans,  the  com 
mittee  have  decided  to  recommend  the  issue  of  government  notes. 

There  is  a  necessity  for  money,  and  the  object  of  the  authority  to  issue 
$150,000,000  U.  S.  notes,  not  bearing  interest  and  made  legal  tender,  is  to 
pay  the  creditors  of  the  United  States,  and  enable  them  to  discharge  their 
debts.  *  The  propositions  of  com 

mittees  from  Boards  of  Trade  and  banks,  which  recently  visited  Washing 
ton,  submitted  to  the  Secretary  of  the  Treasury  and  declined  by  him,  dif 
fered  from  the  theory  of  this  bill  so  far,  as  to  require  that  instead  of  the 
issue  of  the  United  States  notes  the  banks  should  be  relied  upon  to  furnish 
the  amount  needed.  The  effect  of  this  would  be  that  the  government 
bonds  must  first  be  disposed  of,  and  the  money  received  for  them  paid  to 
the  contractors ;  in  other  words,  that  the  government  should  go  into  the 
money  market  and  negotiate  their  bonds,  without  restriction  as  to  the 
rate  or  terms,  at  a  time  when  the  government  is  discredited  by  the  delay 
and  the  difficulties  that  have  occurred  in  paying  contractors  and  others ; 
taking  the  notes  of  suspended  banks  in  payment  of  these  bonds,  and  with 
these  bank  notes,  thus  obtained,  pay  off  the  contractors.  The  obvious  ef 
fect  of  such  an  arrangement  would  be  to  put  the  reins  of  our  national 
finances  in  the  hands  of  the  banks,  leaving  to  them  the  direction  of  our 
path,  with  little  opportunity  for  the  government  to  exercise  any  influence 
on  the  subject.  Exactly  upon  what  terms  the  government  bonds  could 
be  negotiated  now,  under  such  circumstances,  no  one  can  say ;  but  last 
Summer,  when  the  banks  made  their  negotiation  with  the  Secretary  of 
the  Treasury  for  $100,000,000,  they  at  first  refused  to  do  anything,  because 
the  Secretary  was  restricted  by  law  to  taking  par  for  seven  per  cent, 
bonds  payable  in  twenty  years,  and  for  seven  and  three-tenths  Treasury 
notes  payable  in  three  years.  They  finalty  decided,  though  with  great  re 
luctance — influenced  by  patriotic  regard  for  the  public  interest  as  well  as 
wisely  consulting  their  own— to  take  $100,000,000  of  the  latter;  though  at 
that  time,  as  now,  money  was  not  worth  for  commercial  purposes  more 
than  five  per  cent.  It  is  proposed  in  this  bill  to  limit  the  Secretary  to  par 
for  six  per  cent,  bonds,  the  principal  and  interest  to  be  payable  in  specie 
or  its  equivalent.  It  is  believed  that  there  can  be  nothing  more  secure 


57 

than  these  bonds,   which  thus  become,  as  it  were,  a  standard  of  value  in 
reference  to  the  currency. 

In  the  war  of  1812  the  Government  paid  for  its  supplies  with  funds  ob 
tained  from  the  banks  in  the  same  manner  as  proposed  in  the  plan  recent 
ly  submitted  to  the  Secretary  by  those  committees.  The  bonds  of  the 
United  States  were  then  negotiated  in  some  instances  at  twenty  per  cent, 
less  than  their  par  value,  and  paid  for  in  bank  currency  of  different  de 
grees  of  depreciation,  according  to  locality,  but  averaging  from  twenty  to 
twenty-five  per  cent,  discount,  as  compared  with  coin.  To  render  the 
government  financially  more  independent,  it  is  necessary  to  make  the 
United  States  notes  a  legal  tender.  It  is  possible  that  they  would  become 
a  practical  tender,  like  bank  notes,  without  providing  for  them  to  be  a  le 
gal  tender.  If  this  were  a  foreign  war  there  would  be  no  doubt  of  it ;  but 
in  this  present  emergency,  when  those  who  are  openly  or  secretly  dis 
loyal  to  the  government  are  found  everywhere  to  suggest  obstacles  that 
may  embarrass  the  government,  nothing  should  be  omitted  that  will  add 
to  their  efficiency.  I  am,  therefore,  in  favor  of  making  the  notes  a  legal 
tender,  believing  the  Secretary  of  the  Treasury,  who  alone  has  the  power 
to  issue  them,  can  and  will  use  the  power  with  his  well  known  discretion, 
and  that  it  will  assist  him  in  his  endeavor  to  keep  the  notes  at  par  with 
coin.  We  shall  probably  be  told  that  England,  in  her  great  struggle, 
while  specie  payments  were  suspended,  never  made  paper  money  a  legal 
tender.  But  in  this  respect  her  example  should  serve  us  as  a  warning 
rather  than  a  guide,  because  instead  of  it  she  did  what  was  much  wrorse, 
by  suspending  the  laws  to  enforce  the  payment  of  debts  in  cases  where 
the  paper  money  had  been  refused  as  a  tender. 

It  is  important  in  this  great  struggle  to  show  the  superiority  of  the 
principles  of  freedom,  of  education,  of  the  elevation  of  mankind,  upon 
which  society  at  the  North  is  based,  over  those  of  slavery,  which  doom 
men  to  hopeless  ignorance  in  order  to  insure  abject  obedience.  To  do 
this  our  resources  of  every  kind  are  abundant,  both  in  men  and  in  means ; 
and  it  is  only  necessary  to  draw  them  out  in  order  to  be  successful. 

To  fail,  would  not  be  because  the  nation  was  so  poorly  endowed  as  to 
be  without  the  means  of  success,  but  because  it  refused  to  make  use  of 
them.  Such  a  result,  if  it  were  possible,  would  not  weaken  the  truth  of 
the  great  principles  for  which  we  are  contending;  but  would  simply 
demonstrate  that  we,  of  this  generation,  were  faithless  in  guarding  those 
principles;  faithless  to  ourselves;  faithless  to  our  country;  faithless  to 
good  government  throughout  the  world;  and,  since  such  infidelity  is  a 
violation  of  unquestionable  duty,  faithless  to  God." 

MR.  ROSCOE  CONK  LING  obtained  the  floor. 

MR.  MORRILL,  of  Vermont — "  I  ask  the  gentleman  from  New  York  to 
yield  the  floor.  Two  members  of  the  majority  of  the  Committee  of  Ways 
and  Means  have  spoken  on  this  question,  and  if  the  gentleman  will  permit 
me  now  to  express  the  views  of  the  minority  of  the  Committee  against  the  pend 
ing  bill,  I  will  be  obliged  to  him." 

MR.  EOSCOE  CONKLING — ';  I  yield  to  the  gentleman  from  Vermont." 

MR.  STEVENS— "  I  feel  it  my  duty  to  state  that  the  Treasury  Depart 
ment  is  urgent  for  the  passage  of  this  bill,  and  I  trust,  therefore,  that 
the  vote  on  it  will  not  be  put  off  longer  than  Thursday  next." 


58 

MR.  SPAULDING—  "I  desire  to  call  the  attention  of  the  House  to  a  let 
ter  which  I  have  just  received  from  the  Secretary  of  the  Treasury.  It  is  a 
note  to  me  urging  the  immediate  passage  of  this  bill  without  further  de 
lay.  For  the  purpose  of  letting  the  House  understand  the  necessities  of 
the  Treasury,  I  ask  the  Clerk  to  read  an  extract  from  that  letter." 

The  Clerk  read  as  follows  : 

"  Immediate  action  is  of  great  importance.  The  Treasury  is  nearly 
empty,  I  have  been  obliged  to  draw  for  the  last  installment  of  the  No 
vember  loan.  So  soon  as  it  is  paid,  I  fear  the  banks  generally  will  refuse 
to  receive  the  United  States  notes,  unless  made  a  legal  tender.  You  will 
see  the  necessity  of  urging  the  bill  through  without  more  delay."  *  * 

MR.  THOMAS,  of  Massachusetts — "Has  the  gentleman  any  further  com 
munication  that  has  been  received  from  the  Secretary  of  the  Treasury 
with  reference  to  this  bill  ?  If  there  has  been  any  received  I  hope  he  will 
be  kind  enough  to  have  it  read  to  the  House." 

MR.  SPAULDING — "  A  communication  has  been  addressed  by  the  Sec 
retary  of  the  Treasury  to  the  Committee  of  Ways  and  Means,  and  I  have 
no  objection  to  its  being  read." 

MR.  ROSCOE  CONKLING— "  I  would  like  to  know  whether  the  gentle 
man  intends  to  have  the  whole  of  the  communication  read,  or  only  ex 
tracts?" 

MR.  SPAULDING — "I  ask  the  Clerk  to  read  what  I  send  to  him.  The 
balance  of  the  communication  is  in  relation  merely  to  formal  amend 
ments.  What  the  Clerk  will  read  is  all  of  the  communication  that  refers 
to  the  principle  of  the  bill." 

MR.  VALLANDIGHAM — "Has  the  Committee  of  Ways  and  Means  re 
ceived  the  letter  it  was  expecting  from  the  Secretary  of  the  Treasury  ?" 

MR.  SPAULDING — "This  is  the  one." 

(The  Clerk  here  read  the  letter  of  the  Secretary  of  the  Treas 
ury,  dated  January  29,  1862,  as  published  on  page  45.) 

MR.  ROSCOE  CONKLING—"  I  now  call  for  the  reading  of  the  rest  of  that 
letter." 

MR.  SPAULDING — "There  is  not  the  least  objection  to  its  being  read. 
It  is,  however,  in  the  committee  room.  I  will  state  wrhat  the  remainder  of 
the  letter  is.  The  Secretary  of  the  Treasury  suggests  some  amendments 
to  the  bill.  He  proposes  two  new  sections  to  the  bill,  one  relating  to 
counterfeiting  and  the  other  in  regard  to  the  manner  in  which  the  notes 
shall  be  executed.  He  proposes  instead  of  having  them  signed  by  clerks 
that  there  shall  be  a  seal  or  die  engraved  upon  them,  which  will  indicate 
the  authority  under  which  they  are  issued." 

MR.  BOSCOE  CONKLING—  "  Are  those  the  only  amendments?" 

MR.  SPAULDING — "There  are  two  or  three  smaller  amendments  not  af 
fecting  the  principle  of  the  bill,  however,  in  any  way.  We  propose  in  the 
committee  to  act  on  those  amendments  to-morrow  morning.  If  the  letter 
w^ere  here  I  would  not  have  the  slightest  objection  to  its  being  read." 

MR.  LOVEJOY— "I  want  to  ask  the  gentleman  of  the  Committee  of 
Ways  and  Means  whether  they  intend  to  propose  to  have  action  on  this 
bill  before  action  is  taken  on  the  tax  bill?" 


59 

MR.  SPAULDIXG — "  I  have  been  anxious  to  have  the  tax  bill  brought  in  to  be 
first  considered;  but  the  gentleman,  from  Vermont  (Mr.  Morrill),  who  is  chair 
man  of  the  sub-committee  on  the  lar-iff  and  Tax  bills,  informs  us  that  the  sub 
committee  having  that  matter  in  charge  will  not  be  able  to  report  to  the  Com 
mittee  of  Ways  and  Means  for  several  days  yet.  The  necessities  of  the  Treas 
ury,  therefore,  will  compel  us  to  act  on  this  bill,  however  reluctantly,  before  the 
Tax  biH  can  be  introduced.'11 

MR.  EOSCOE  CONKLIXG— ik  I  hope  that  the  remaining  portion  of  the 
letter  of  the  Secretary  of  the  Treasury  will  be  printed  in  the  Globe." 

MR.  SPAULDIXG — "I have  no  objection  to  that." 

MR.  KOSCOE  COXKLIXG — "  The  gentleman  has  read  the  whole  letter,  and 

I  ask  him  to  slate  whether  the  Secretary  is  for  or  against  this  bill  with  the  le 
gal  tender  provision  in  it." 

MR.  SPAULDIXG — "He  is  for  it.  I  have  another  letter  from  him  in 
which  he  states  that  he  is  anxious  to  have  it  passed  in  that  form.-' 

MR.  EOSCOE  CONKLING— '•  Let  us  have  that  read/' 
MR.  SPAULDIXG— "It  is  a  letter  to  myself." 

MR.  MAYNARD — "  I  ask  my  colleague  on  the  Committee  of  Ways  and 
Means  whether  the  portion  of  the  Secretary's  letter  which  has  been  read 
is  not  all  of  it  that  appertains  to  the  principle  of  the  bill ;  and  whether  the 
balance  does  not  relate  merely  to  matters  of  detail." 

Mr.  SPAULDIXG — ;'Yes,  sir.  I  will  read  a  paragraph  of  the  letter  writ 
ten  by  the  Secretary  to  myself  this  afternoon : 

"I  came  with  reluctance  to  the  conclusion  that  the  legal  tender  clause 
is  a  necessity ;  but  I  came  to  it  decidedly,  and  support  it  earnestly.  I  do 
not  hesitate  since  I  have  made  up  my  mind.  *  *  The 

conclusion  I  have  arrived  at  has  convinced  me  that  it  is  important  to  the 
success  of  the  measure." 

And  then,  on  motion  of  Mr.  Wright,  the  House  (at  half-past 
four  o'clock  P.  M.)  adjourned. 

The  following  is  a  copy  of  the  letter  of  Secretary  Chase  referred 
to  in  the  foregoing  proceedings  of  the  House,  and  from  which 
extracts  were  read: 

LETTER   FROM    HON.   S.    P.   CHASE. 

MOXDAY.  3d  February,  1862. 

MY  DEAR  SIR: — Mr.  Sewardsaid  to  me  on  yesterday  that  you  observed 
to  him,  that  my  hesitation  in  coming  up  to  the  legal  tender  proposition 
embarrassed  you,  and  I  am  very  sorry  to  observe  it,  for  my  anxious  wisli 
is  to  support  you  in  all  respects. 

It  is  true  that  I  came  with  reluctance  to  the  conclusion  that  the  legal 
tender  clause  is  a  necessity,  but  I  came  to  it  decidedly,  and  I  support  it 
earnestly.  I  do  not  hesitate  when  I  have  made  up  my  mind,  however 
much  regret  I  may  feel  over  the  necessity  of  the  conclusion  to  which  I 
come. 

I  have  just  sent  a  note  to  Mr.  Stevens,  with  two  sections  (penal)  instead 
of  one.  You  will,  I  think,  see  the  necessity  of  them.  The  one  I  have 


60 

already  sent  I  fear  is  not  quite  strong  enough.     What  has  the  Committee 
done  about  the  amendments  suggested  ?    I  thought  them  important. 

Immediate  action  is  of  great  importance.  The  Treasury  is  nearly  empty.  1 
have  been  obliged  to  draw  for  the  last  installment  of  the  November  loan ;  so 
soon  as  it,  is  paid,  I  fear  the  banks  generally  will  refuse  to  receive  the  United 
States  notes.  You  will  see  the  necessity  of  urging  the  bill  through  without  more 
delay.  Very  sincerely  yours, 

HON.  E.  G.  SPAULDING.  S.  F.  CHASE. 

On  the  4th  of  February,  the  House  gave  consent  to  Mr.  Morrill 
to  have  printed  a  substitute  having  the  sanction  of  one-half  the 
Committee  of  Ways  and  Means,  which  he  proposed  to  offer  at  the 
proper  time  in  place  of  the  original  bill.  Mr.  Stratton,  one  of 
the  Committee,  changed  his  mind,  and  now  favors  the  substi 
tute  instead  of  the  bill  first  reported,  leaving  the  Committee  of 
Ways  and  Means  equally  divided. 

MR.   MORRILL'S  SPEECH. 

MR.  MORRILL,  of  Vermont — "  MR.  CHAIRMAN:  Engaged  as  I  have 
been  upon  other  matters  of  at  least  equal  importance,  I  have  not  had  the 
time  to  prepare  an  elaborate  speech;  but  the  subject  of  issuing  $150,000,- 
000  of  paper  currency  and  making  it  a  legal  tender  by  the  Government  at 
a  single  bound — the  precursor,  as  I  fear,  of  a  prolific  brood  of  promises, 
no  one  of  which  is  to  be  redeemed  in  the  constitutional  standard  of  the 
country— could  not  but  arrest  my  attention,  and  having  strong  convictions 
of  the  impolicy  of  the  measure,  I  should  feel  that  I  utterly  failed  to  dis 
charge  my  duty  if  I  did  not  attempt  to  find  a  stronger  prop  for  our 
country  to  bear  upon  than  this  bill — a  measure  not  blessed  by  one  sound 
precedent  and  damned  by  all. 

I  know  the  gentlemen  who  have  had  the  latter  in  charge  have  bestowed 
upon  it  much  time  and  perplexing  thought,  and  from  their  thorough 
knowledge  of  the  subject  and  large  acquaintance  with  the  monetary  circles 
of  the  country,  their  opinions  will  have  great  weight  in  this  Committee — 
deservedly  so— and  I  shall  only  claim  a  candid  hearing  in  behalf  of  the 
substitute  of  the  minority  of  the  Committee  of  Ways  and  Means,  well 
knowing  that  we  are  all  inflamed  by  the  same  zeal  for  the  triumphant  suc 
cess  of  our  arms,  the  same  solicitude  for  the  honor  and  welfare  of  the  peo 
ple,  who  mean  to  live  and  die  under  the  flag  of  our  Union,  and  that  we 
can  have  but  one  wish,  which  is,  that  the  best  plan  shall  be  adopted. 

We  are  urged  by  the  gentleman  from  New  York  (Mr.  Spaulding)  to  pass 
this  bill  as  "a  war  measure'' — ua  measure  of  necessity,"  and  to  enforce 
this  idea  he  gives  you  the  figures  of  our  probable  requirements,  if  the 
war  should  be  prolonged  until  July  1,  1863.  Sir,  I  have  no  expectation 
of  being  required  to  support  a  war  for  that  length  of  time.  The  ice  that 
chokes  the  Mississippi  is  not  more  sure  to  melt  and  disappear  with  the 
approaching  vernal  season,  than  are  the  rebellious  armies  upon  its  banks 
when  our  western  army  shall  break  from  its  moorings  and  rush  with 
the  current  to  the  Gulf,  and  baptise  as  it  goes,  in  blood,  the  people  to  a 
fresher  allegiance.  At  the  same  time,  the  men  of  the  East  will  only  ask 


61 

for  an  opportunity  to  cross  bayonets  with  the  chivalry— to  leave  epithets 
and  try  what  virtue  there  is  in  steel!  That  hour  is  approaching,  and  I 
have  no  fear  of  the  result. 

'Fly  swiftly  round,  ye  wheels  of  time! ' 

We  can  close  this  war  by  the  30th  day  of  July  next  as  well  as  in  thirty 
years.  Let  us  second  general  McClellan  for  a  '  short  and  sharp'  conflict. 
By  so  doing-  \ve  shall  economise  both  blood  and  Treasury  notes. 

If  this  paper  money  is  'a  war  measure,'  it  is  not  waged  against  the 
enemy,  but  one  that  may  well  make  him  grin  with  delight.  I  would  as 
soon  provide  Chinese  wooden  guns  for  the  army  as  paper  money  alone  for 
the  army.  * 

If,  by  the  provisions  of  this  bill,  we  cut  ourselves  off  from  all  other  re 
sources,  it  is  to  be  considered  how  much  could  be  realized  from  this,  in 
my  judgment,  the  weakest  resource  within  our  grasp,  which  is  the  power 
of  a  bank  issue,  without  any  capital,  and  not  even  specie  enough  to  ten 
der  the  odd  change.  It  is  an  experiment  to  inject,  by  a  governmental 
force  pump,  into  the  arteries  of  commerce  a  new  currency,  when  the  ar 
teries  are  already  filled.  The  whole  bank  circulation  of  the  United  States 
in  1860  was  $207,102,477;  that  of  fhe  rebel  States  was  $50,647,028,  leaving 
for  the  loyal  States  $156,566,449.  But  at  this  time,  in  consequence  of  the 
diminution  of  all  business,  except  that  nourished  by  the  war,  the  bank- 
circulation  is  over  $20,000,000  less,  or  about  $136,000,000.  I  admit  that  we 
can  drive  a  considerable  share  of  this  home  upon  the  banks,  and  substi 
tute  that  of  the  notes  of  the  United  States  in  its  place.  *  *  *  * 

It  is  thus  apparent  that  $20,000,000  is  about  all  that  would  be  absorbed 
by  this  country,  or  kept  afloat  in  the  present  condition  of  monetary  affairs 
without  the  intervention  of  Congressional  omnipotence  in  making  them  a 
legal  tender.  If  so  made,  they  would,  to  the  extent  they  are  tendered  for 
public  dues,  be  a  forced  loan ;  and  to  the  extent  of  the  difference  between 
their  current  value  and  that  of  standard  coin,  it  would  be  a  breach  of  pub 
lic  faith.  It  is  tnie  that  the  measure  might  be  hailed  with  delight  by 
bankrupts ;  and  if  the  bill  passes,  my  friend  from  New  York  (Mr.  Conk- 
ling)  no  longer  need  press  his  bankrupt  law,  for  they  would  have  no  occa 
sion  to  go  into  Chancery  in  order  to  scale  and  settle  off  with  their  credit 
ors,  as  "legal  tenders"  would  soon  be  offered  at  rates  entirely  within 
their  means.  *  *  The  Govern 

ment  can  flood  the  country  with  150,000,000  paper  dollars,  but  from  that 
moment  you  would  vastly  increase  the  cost  of  carrying  on  the  war;  prices 
would  go  up,  and  the  addition  we  should  pile  upon  our  national  debt 
would  prove  that  it  might  have  been  even  wiser  to  have  burnt  our  paper 
dollars  before  they  were  issued.  The  inflation  of  the  currency  would  be 
inevitable.  In  ordinary  times  few  comprehend  the  Archimedean  leverage 
of  a  few  millions  added  to  or  subtracted  from  the  currency  of  a  nation 
actively  engaged  in  the  affairs  of  the  world.  ****** 

No  one  here  contemplates  but  that  at  some  future  time  the  banks  and 
the  Government  shall  resume  specie  payments — the  banks  depending  en 
tirely  upon  whether  the  Government  does  so  or  not — and  if  so,  I  invite 
them  to  calculate  the  cost  of  the  descent  from  that  basis,  the  cost  of  the 
return,  the  expiratory  pains  to  be  suffered,  and  then  determine  whether 
we  shall  carry  on  this  war  on  a  specie  basis,  or  on  a  ceaseless  flood  of 
paper,  bartered  at  discordant  prices  in  every  city,  town  and  hamlet  of  the 
country,  bearing  in  mind,  however  cheaply  obtained,  every  dollar  is  to  be 


62 

and  will  be  ultimately  repaid  in  gold  and  silver  coin  raised  by  taxation. 

That  I  am  not  wrong  in  supposing  if  we  launch  this  measure  that  we 
have  nothing  else  to  put  afloat,  is  quite  apparent  in  the  able  speech  of 
my  friend  from  New  York  (Mr.  Spaulding),  who  plainly  occupied  his 
ground  reluctantly ;  for  besides  the  150,000,000  of  notes  he  now  proposes 
to  authorize,  he  more  than  hints  at  the  possibility  of  '•'  a  further  issue  of 
demand  notes,  if  Congress  shall  hereafter  deem  it  necessary.7'  I  main 
tain  that  the  bill,  as  reported  by  the  Committee  of  Ways  and  Means, 
should  not  pass,  because  it  will  infinitely  damage  the  national  credit ;  be 
cause  it  will  cut  off  all  other  chance  of  supplies;  because  it  will  reduce 
our  standard  of  legal  tender,  already  sufficiently  debased ;  because  it  will 
inflate  the  currency  and  increase  manyfold  the  cost  of  the  war;  because 
it  would  slide  into  the  place  proper  for  taxation ;  because,  as  a  resource, 
it  must  ultimately  fail,  and  tend  to  a  premature  peace ;  because  it  is  a 
question  of  doubtful  constitutionality ;  because  it  is  an  export  facto  law,  im 
moral,  and  a  breach  of  the  public  faith ;  because  it  will  at  once  banish  all 
specie  from  circulation ;  because  it  will  dampen  the  ardor  of  our  men  at 
home,  as  well  as  soldiers  in  the  fleld ;  because  it  will  degrade  us  in  the 
estimation  of  other  nations;  because  it  will  cripple  American  labor,  and 
throw  at  least  larger  wealth  into  the  hands  of  the  rich ;  and  because  there 
is  no  necessity  calling  for  such  a  desperate  remedy.  I  agree  with  the  gen 
tleman  from  New  York  (Mr.  Spaulding)  in  one  thing  most  cordially;  our 
finances  stand  in  need  of  the  tonic  of  decided  military  success.  Without 
that  our  stocks  will  continue  to  be  quoted  flat.  And  yet  I  am  no  chronic 
grumbler.  Standing  at  zero,  our  army  rose  as  if  by  a  magical  wand  and 
illumined  the  whole  heavens  by  its  magnificent  sweep.  Do  not  let  it  be 
said  we  rose  like  the  rocket  and  fell  like  the  stick. 

Mr.  Chairman — It  will  be  seen  from  the  substitute,  as  proposed  on  the 
part  of  one-half  of  the  Committee  of  Ways  and  Means,  that  I  do  not  object  to 
the  issue  of  United  States  notes  to  a  limited  extent,  to  circulate  as  curren 
cy.  It  is  both  convenient  and  proper.  But  I  wish  to  have  this  issue 
marked  by  metes  and  bounds,  saying  at  the  outset,  '  thus  far  shalt  thou 
go  and  no  further.'  Then,  let  them  be  based  on  as  solid  a  foundation  as 
the  everlasting  hills  that  they  shall  be  the  full  equivalent  of  standard  coin. 
This  can  be  done  by  fixing  the  amount  ample,  but  reasonable,  that  no 
more  than  the  fixed  amount  shall  at  any  time  be  put  in  circulation,  and  by 
providing  taxation  sufficient  at  all  times  to  retire  them  or  to  maintain  their 
full  value.  But,  with  all  the  earnestness  I  possess,  I  do  protest  against 
making  anything  a  legal  tender  but  gold  and  silver,  as  calculated  to  un 
dermine  all  confidence  in  the  Republic,  whose  reputation  should  be  dearer 
to  statesmen,  as  well  as  to  soldiers,  than  life  itself. 

We  propose  no  new  issue  of  Treasury  notes,  but  leave  the  fifty  millions  already 
authorized  to.  be  issued  and  re-issued  as  may  be  found  necessary  or  convenient. 
This  will  secure  us  against  an  inflated  currency. 

Then  it  is  proposed  to  issue  $100,000,000  in  United  States  notes,  bearing 
interest  at  the  rate  of  three  and  sixty-five  hundredths  per  cent.,  payable 
at  the  pleasure  of  the  United  States,  and  allowing  them  with  accumulated 
interest  to  be  received  for  all  debts  and  demands  (taxes  included)  due  to 
the  United  States,  except  duties  on  imports,  and  exchangeable  at  the  will 
of  the  holder,  whenever  presented  in  sums  not  less  than  fifty  dollars,  for 
United  States  seven  and  three-tenths  per  cent,  coupon  or  registered  stock. 
They  are  also  to  be  received  at  par.  with  accumulated  interest,  for  any 
bonds  the  Government  may  hereafter  issue.  These  are  to  be  paid  out  for 


C3 

all  salaries,  debts  and  demands  due  to  individuals  and  corporations,  at 
their  option  within  the  United  States.  In  substance  this  is  very  like  English 
Exchequer  notes  issued  in  anticipation  of  revenue.  It  is  most  probable 
these  notes  would  maintain  their  credit  at  or  near  par;  and  if  there  should 
be  any  difference  between  these  and  gold,  it  would  be  an  honest  difference, 
visible  to  all  men.  As  they  accumulate  they  will  be  funded  and  retired, 
or  re-issued,  as  the  exigencies  of  the  Government  may  require.  They 
equip  the  Treasury  ns  well  as  any  legal  tender  paper  could  do,  while  bear 
ing  interest  they  would  not  pass  into  the  general  volume  of  the  currency, 
and  they  afford  the  only  possible  channel  of  obtaining  any  considerable 
sums  to  be  consolidated  into  stocks.  They  cannot  exceed  the  amount  of 
internal  duties  that  will  be  levied,  which  will  create  a  sure  and  constant 
demand  for  these  notes,  and  sustain  their  credit  in  every  State  and  Terri 
tory  in  the  country. 

We  do  not  propose  to  receive  these  notes  for  duties  on  imports,  for  the 
reason  that  it  is  desirable  to  leave  the  tariff  stable  amid  all  fluctuations, 
and  also  that  we  may  secure  the  coin  we  promise  to  pay  out  as  interest  on 
the  bonds. 

It  is  then  proposed,  in  order  to  perfect  this  plan  in  all  its  parts,  to  is 
sue  $200,000,000  in  coupon  or  registered  bonds,  payable  in  ten  years,  with 
interest  semi-annually  in  coin,  at  the  rate  of  seven  and  three-tenths  per 
cent,  per  annum.  This  is  comparatively  a  high  rate  of  interest,  and  it 
may  be  necessary  that  it  should  be  so,  in  order  to  get  the  stock  taken  up 
by  capitalists ;  but  the  time  the  bonds  are  to  run  is  limited  to  ten  years, 
because  it  would  be  much  against  the  interest  of  the  United  States  to  en 
gage  to  pay  a  high  rate  of  interest  for  a  long  period  of  time.  We  think 
there  can  be  no  doubt  that  these  bonds  will  all  be  taken,  commencing  as 
soon  as  the  tax  bill  shall  be  passed.  Unless  the  credit  of  the  United 
States  shall  be  utterly  shattered,  which  is  not  for  a  moment  to  be  appre 
hended,  these  bonds  must  be  considered  a  most  desirable  investment,  both 
in  large  and  small  sums. 

It  is  proposed  to  issue  $300,000.000  in  coupon  or  registered  bonds,  pay 
able  in  twenty-five  years,  with  interest  at  six  per  cent.,  payable  semi-an 
nually  in  coin.  Usually,  government  bonds  running  for  the  longest  time 
command  the  highest  price,  and  for  permanent  investment  are  most  eager 
ly  sought  after,  at  home  and  abroad.  As  we  emerge  from  our  present  em 
barrassments,  the  other  forms  of  debts  due  by  the  United  States  will  na 
turally  be  funded  in  such  stock. 

We  promise  coin  for  all  interest  on  bonds,  as  it  is  indispensable  that 
all  engagements  assuming  this  solemn  form  should  in  no  instance  repu 
diate  the  standard  of  the  Constitution. 

We  strike  out  all  words  in  relation  to  any  foreign  loan,  as  during  this 
war  we  expect  to  fight  our  own  battles,  furnish  our  own  means,  without 
any  foreign  aid  or  assistance;  and  if  we  can  be  permitted  to  do  that  we 
shall  ask  no  favors. 

The  substitute  avoids  all  the  material,  and,  we  might  say,  fatal  objec 
tions  to  the  original  bill;  is  entirely  practical  and  feasible  in  its  character, 
and  will  not  only  relieve  the  Treasury  from  its  present  necessities,  but  do 
something  toward  making  provision  for  the  future  wants.  It  is  a  ques 
tion  that  will  mark  for  weal  or  for  woe  an  important  page  of  our  history ; 
and  I  invoke  the  courage  and  judgment  of  the  Committee  to  meet  the 
question  with  that  cool  deliberation  its  high  moment  demands." 


ROSCOE    CONKLING  S    SPEECH. 

"  MR.  CHAIRMAN — The  member  of  the  Committee  of  Ways  and  Means 
(Mr.  Spaulding),  by  whom  this  bill  was  reported,  was  well  warranted  in 
all  he  said  of  its  great  magnitude,  and  of  the  thoughtful,  serious,  coura 
geous  attention  due  to  its  consideration.  It  concerns  the  life  of  the  nation 
— the  means  whereby  it  lives.  The  credit  of  the  government,  like  the 
credit  of  an  individual,  consists  of  the  ability  and  integrity  to  pay  all 
debts  and  perform  all  promises  with  scrupulous  exactness  and  punctual 
ity.  This  ability  and  integrity,  this  untarnished  public  faith  and  un 
questioned  pecuniary  solvency  is  that  without  which  no  Government  can 
long  survive.  Public  credit  alone  cannot  confer  national  immortality  or 
national  longevity ,  but  the  loss  of  public  credit  will  be  inevitably  and 
swiftly  followed  by  national  decrepitude  and  national  death.  This  is  true 
in  peace,  when  wars  and  rumors  of  wars  are  hushed  throughout  the 
earth;  it  is  true  in  uneventful  times,  in  periods  barren  of  action  and  pro 
lific  of  repose ;  but  what  shall  be  said  of  its  urgent,  warning  truth,  as  ap 
plicable  to  us  in  this  dark  hour  of  trial  and  of  danger?  Immediate  and 
adequate  financial  facilities  constitute,  beyond  all  question,  the  overtopping, 
overmastering  subjects  with  which  we  have  Hie  power  to  deal. 

Gentlemen  have  longed  for  victories  to  re-invigorate  the  languishing  energies 
of  finance.  Victory,  no  doubt,  would  exert  a  potent  influence ;  but,  sir, 
the  Treasury  will  control  and  decide  the  war,  not  the  war  the  Treasury. 
Indeed,  the  question  of  money  and  credit  is  all  there  is  before  us ;  it  is 
practically  the  only  unsettled  question  of  the  war.  Armies  and  navies 
may  perish,  and  a  public  credit,  well  preserved,  can  replace  them ;  but  if 
the  public  credit  perishes,  the  army  and  navy  can  only  increase  the  disas 
ter  and  deepen  the  dishonor.  ***** 

I  deny  that  any  necessity  is  upon  us  to  take  the  case  out  of  settled  rules. 
We  need  money— large  sums  of  money — and  the  whole  resources  and 
property  of  the  nation  are  liable  to  pay  tribute  to  raise  it.  We  owe  debts 
— large  debts — and  the  whole  property  of  the  country  is  holden  to  pay 
them.  Does  anybody  suppose  that  the  security  is  not  ample,  or  the  re 
sources  not  abundant?  My  colleague  from  the  Erie  District  (Mr.  Spauld 
ing)  told  us  that  the  taxable  property  of  the  nation  amounts  to  sixteen 
thousand  millions  of  dollars;  and  he  produced  a  statement  from  the  Cen 
sus  Bureau  to  prove  it.  In  reality  it  is  vastly  more  than  that,  because  he 
gave  us  a  self-fixed  valuation — the  valuation  fixed  by  proprietors  them 
selves,  having  an  interest  in  reducing  and  covering  up  the  amount. 

According  to  my  colleague,  at  the  end  of  this  fiscal  year  our  debt  will 
be  only  $650,000,000.  One  would  think  here  was  margin  enough  for  Wall 
street,  State  street,  or  Chestnut  street.  Sir,  it  is  margin  enough,  properly 
husbanded  from  first  to  last,  to  enable  us  to  raise  all  the  money  we  want 
at  five  per  cent.,  and  history  proves  it. 

Now,  sir,  what  does  this  plea  Of  necessity  mean— this  plea  upon  which 
we  are  invited  to  leave  the  trodden  paths  of  safety,  and  seek  new  methods 
of  '  winning  false  moneys  from  the  crucible  called  debt  ?'  What  is  the 
necessity  which  prevents  adherence  to  the  old  and  approved  methods  of 
raising  money?  The  arguments  must  be  two-fold:  First,  that  the  peo 
ple  will  be  better  ready  at  some  other  time  than  the  present  to  pay  what, 
in  the  end,  they  must  pay,  with  interest;  and  second,  that  necessary  and 
legitimate  taxation  will  be  unpopular,  and  bring  denunciation  upon  those 
who  vote  it.  Sir,  I  take  issue  upon  both  propositions.  I  say  the  country 


65 

. 

is  rich  and  ready.  Money  is  abundant— very  abundant.  There  is  in  the 
loyal  States  $250,000,000  of  gold— the  gentleman  from  Massachusetts  (Mr. 
Alley)  said  the  other  day  $300,000,000— more  than  ever  before,  and  if  we 
deserve  it,  we  can  have  it.  The  whole  country  is  full  of  wealth.  The^ 
enormous  expenditures  of  this  home  war  have  been  made  among  our 
selves,  and  the  money  has  remained  here  and  not  gone  into  the  channel 
which  foreign  war  prescribes  for  currency.  The  harvest  has  been  abun 
dant;  materials  and  productions,  raw  and  wrought,  have  been  in  great 
demand;  and  nearly  every  loyal  State  teems  with  the  elements  of  ma 
terial  prosperity.  From  a  very  extravagant,  we  have  lately  become  a 
very  economical  people,  and  thus  the  percentage,  as  well  as  the  aggre 
gate  of  savings  of  earnings,  is  unusually  great.  We  are  able  to  pay  now, 
and  we  never  can  pay  better  than  now.  ****** 

There  is  one  thing,  however,  about  the  proposed  banking  scheme,  and 
about  the  bill  before  us,  intended  probably  to  attract  votes,  which  seems 
of  very  questionable  policy  and  very  doubtful  ethics.  I  mean  hostility  to 
the  existing  banks  of  the  country.  And  inasmuch  as  I  own  not  a  far 
thing  in  the  stock  of  any  bank,  and  have  not  the  slightest  connection 
with  one,  perhaps  a  word  in  behalf  of  banks  in  loyal  States  will  be  borne 
with  from  me. 

The  present  troubles,  or  rather  their  own  patriotic  action,  have  broken 
the  banks ;  for  every  commercial  man  in  this  House  knows  that  the  banks 
were  never  stronger  than  when  the  Secretary  of  the  Treasury  appealed  to 
them  for  loans.  They  allowed  the  Government  to  carry  off  their  specie,  their 
capital  from  their  vaults,  and  if  that  did  not  break  them,  they  at  all  events 
might  have  adopted  a  policy  which  would  have  saved  them.  But  they 
had  to  suspend,  and  the  design  of  this  bill  would  seem  to  be  to  prevent 
their  resumption  of  specie  payment.  At  all  events,  it  is  obviously  the 
policy  in  some  quarters  to  preach  a  crusade  against  the  present  banks,  and 
array  prejudices  and  votes  on  that  issue.  *  *  * 

I  propose  to  assign  my  reasons  briefly  for  voting  against  the  attempt  by 
legislation  to  make  paper  a  legal  tender.  The  proposition  is  a  new  one. 
No  precedent  can  be  urged  in  its  favor;  no  suggestion  of  the  existence  of 
such  a  power  can  be  found  in  the  legislative  history  of  the  country ;  and 
I  submit  to  my  colleague,  as  a  lawyer,  the  proposition  that  this  amounts 
to  affirmative  authority  of  the  highest  kind  against  it.  Had  such  a  power 
lurked  in  the  Constitution,  as  construed  by  those  who  ordained  and  ad 
ministered  it,  we  should  find  it  so  recorded.  The  occasion  for  resorting 
to  it,  or  at  least  referring  to  it,  has,  we  know,  repeatedly  arisen;  and 
had  such  a  power  existed,  it  would  have  been  recognized  and  acted  on. 
It  is  hardly  too  much  to  say,  therefore,  that  the  uniform  and  universal 
judgment  of  statesmen,  jurists  and  lawyers  has  denied  the  constitutional 
right  of  Congress  to  make  paper  a  legal  tender  for  debts  to  any  extent 
whatever.  But  more  is  claimed  here  than  the  right  to  create  a  legal  tender 
heretofore  unknown.  The  provision  is  not  confined  to  transactions  in  future, 
but  is  retroactive  in  its  scope.  It  reaches  back  and  strikes  at  every  exist 
ing  pecuniary  obligation.  This  was  well  put  by  the  gentleman  from  Ohio 
(Mr.  Pendleton),  and  I  concur  with  him  that  substituting  anything  for  gold 
and  silver  in  payment  of  debts,  and  still  more  of  precedent  debts,  is  of 
very  doubtful  constitutionality.  *  * 

But,  sir,  passing,  as  I  see  I  must,  from  the  constitutional  objections 
to  the  bill,  it  seems  to  me  that  its  moral  imperfections  are  equally  seri- 


ous.  It  will,  of  course,  proclaim  throughout  the  country  a  saturnalia  of 
fraud — a  carnival  for  rogues.  Every  agent,  attorney,  treasurer,  trustee, 
guardian,  executor,  administrator,  consignee,  commission  merchant,  and 
every  debtor  of  a  fiduciary  character  who  has  received  for  others  money, 
hard  money,  worth  a  hundred  cents  in  the  dollar,  will  forever  release 
himself  from  liability  by  buying  up  for  that  knavish  purpose,  at  its  de 
preciated  value,  the  spurious  currency  which  we  shall  have  put  afloat. 
Everybody  will  do  it  except  those  who  are  more  honest  than  the  Ameri 
can  Congress  advises  them  to  be.  Think  of  savings  banks  entrusted  Avith 
enormous  aggregates  of  the  pittances  of  the  poor,  the  hungry,  and  the 
homeless,  the  stranger,  the  needlewoman,  the  widow  and  the  orphan, 
and  we  are  arranging  for  a  robbery  of  ten,  if  not  of  fifty,  per  cent,  of 
the  entire  amount,  and  that  by  a  contrivance  so  new  as  never  to  have 
been  discovered  under  the  administration  of  Monroe  Edwards  or  James 
Buchanan. 

To  reverse  the  picture :  after  the  act  shall  have  gone  into  effect,  honest 
men  undertake  transactions  based  upon  the  spurious  tender  at  its  then 
value.  By  and  by  comes  a  repeal,  and  they  are  driven  to  ruin  in  multi 
tudes  by  the  inevitable  loss  incident  to  a  return  to  metallic  currency. 

The  whole  scheme  pre-supposes  that  the  notes  to  be  emitted  will  be 
lepers  in  the  commercial  world  from  the  hour  they  are  brought  into  it ; 
that  they  will  be  shunned  and  condemned  by  the  laws  of  trade  and 
value.  If  this  is  not  to  be  their  fate,  what  is  the  sense,  as  was  said  in 
the  Federal  Constitutional  Convention,  in  attempting  to  legislate  their 
value  up.  Xow,  sir,  I  do  not  believe  that  you  can  legislate  up  the  value 
of  a  thing  any  more  than  you  can  make  generals  heroes  by  legislation. 

Mr.  Chairman — I  believe  all  the  money  needed  can  be  provided  in 
season  by  means  of  unquestionable  legality  and  safety.  The  substitute 
I  have  offered  will,  I  believe,  without  essential  alteration,  effect  that  re 
sult." 

MR.  CONKLING  estimated  the  national  debt  up  to  July  1,  1862, 
at  $806,000,000,  and  concluded  as  follows: 

"There  has  been  no  such  occasion  presented  to  a  nation,  no  such  de 
mand  made  upon  a  nation  during  the  lifetime  of  the  human  race.  The  his 
tory  of  America,  the  history  of  free  government,  the  history  of  constitu 
tional  liberty  begins  or  ends  now.  We  have  our  career  and  our  tradi 
tions  as  a  nation;  they  are  safe;  but  our  history  is  yet  to  be  made.  Our 
destiny  is  without  an  ally  in  the  world,  Avith  nations  banded  against  us, 
to  hold  fast  a  continent  in  the  midst  of  the  greatest,  guiltiest  revolution 
the  world  has  ever  seen.-' 

MK.    BINGHAM,   of  Ohio,   obtained  the  floor. 

MK.  STEVENS  offered  a  substitute  for  the  original  bill,  which 
he  asked  to  have  printed.  After  Mr.  Bingham  had  concluded 
his  speech,  the  substitute  thus  oifered  by  Mr.  Stevens  was  or 
dered  to  be  printed. 


3iR.    HIXGIIAM'S    SPEECH. 

MR.  BINGHAM— *'It  was  far  from  my  purpose,  when  I  came  early 
to  the  House  to-day  to  attend  a  meeting-  of  the  Committee  on  the  Judici 
ary,  to  enter  upon  any  discussion  of  the  important  question  which  now 
commands  the  attention  of  the  Representatives  of  the  people;  and  but  for 
some  remarks  which  have  been  made  to-day  by  the  honorable  gentleman 
from  Xew  York  (Mr.  Roscoe  Conkling),  I  would  not  feel  disposed  now  to 
address  the  Committee.  But,  sir,  as  a  Representative  of  the  people,  I  can 
not  keep  silent  when  I  see  efforts  made  upon  this  side  of  the  House  and 
upon  that  to  lay  the  power  of  the  American  people  to  control  their  cur 
rency — a  power  essential  to  their  interests — at  the  feet  of  brokers  and  of 
city  bankers,  who  have  not  a  title  of  authority,  save  by  the  assent  or  for 
bearance  of  the  people,  to  deal  in  their  paper  issued  as  money. 

I  am 'here  to-day  to  assert  the  rightful  authority  of  the  American  peo 
ple,  as  a  nationality,  sovereignty,  under  and  by  virtue  of  their  Constitu 
tion.  In  saying  that  the  people  of  this  Republic  are  one  people,  a  sover 
eignty,  I  do  not  feel  that  I  shall  be  confronted  by  any  of  the  great  names 
of  the  illustrious  dead  who  have  suddenly  found  favor  with  gentlemen 
upon  the  other  side  of  the  House.  Living,  there  wras  no  epithet  in  our 
language  too  severe  in  its  condemnation,  or  too  much  uncharitable  in  its 
import,  for  the  fit  denunciation  by  certain  parties  of  the  alleged  political 
heresies  of  the  illustrious  man,  Alexander  Hamilton,  and  that  other  illus 
trious  man,  Daniel  Webster,  who  for  strength  of  intellect  stood  alone 
among  the  living;  and  now  dead,  in  his  honored  grave,  sleeps  alone  by 
the  sounding  sea.  I  am  not  myself  of  that  class  of  admirers  who  perse 
cute  men  while  living  and  heap  tuns  of  granite  and  pour  empty  adulation 
upon  their  ashes  when  dead.  I  prefer  to  respect  them  and  their  authority 
while  they  stand  among  the  living  men  of  to-day.  These  great  names 
have  been  invoked  in  this  debate.  For  what  purpose  ?  For  the  purpose 
of  denationalizing  the  people ;  for  the  purpose  of  stripping  the  American 
people  of  the  attributes  of  sovereignty;  for  the  purpose  of  laying,  as  I 
said  before,  at  the  feet  and  at  the  mercy  of  brokers  and  hawkers  on 
'Change  the  power  of  the  people  over  their  monetary  interests  in  this  hour 
of  national  exigency. 

Sir,  there  is  nothing  in  the  records  of  these  illustrious  men  that  justifies 
any  such  base  use  of  their  utterances,  which  were  made  not  only  for  the 
instruction  of  the  men  of  their  own  day,  but  for  the  guidance  of  all  that 
were  to  come  after  them.  I  venture  to  affirm — without  having  recently 
had  the  opportunity  to  read  much  of  what  he  said  upon  that  subject — that 
Alexander  Hamilton,  peerless  almost  among  the  founders  of  the  Consti 
tution,  never  intimated  in  any  paper  of  his  that  the  Government  of  the 
United  States  could  not,  at  its  pleasure,  issue  Treasury  notes,  either 
payable  upon  demand  or  payable  upon  time.  There  wTas  much  said  by  my 
respected  colleague  (Mr.  Pendleton)  with  which  I  entirely  and  altogether 
agree ;  but,  sir,  when  my  colleague  seemed  to  intimate  in  his  argument 
that  he  found  any  warrant  in  the  elaborate  papers  of  Alexander  Hamilton 
against  this  authority  or  power  of  the  Congress  of  the  United  States  to 
authorize  the  issue  of  Treasury  notes,  either  payable  upon  time  or  upon 
demand,  he  greatly  mistook  the  spirit  of  all  he  has  written,  and  which  has 
been  transmitted  to  us.  My  colleague  was  adroit  in  the  handling  of  the 
papers  of  Hamilton,  which  will  live  as  long  as  our  language  lives.  He 
was  one  of  those  men  upon  whom  it  pleased  God  to  confer  those  extraor- 


68 

clinary  gifts  which  command  the  homage  and  admiration  of  men,  whether 
they  agreed  with  him  or  not.  The  passage  which  my  colleague  quoted 
from  his  work  was  an  argument  in  which  he  showed  the  propriety  of 
establishing  a  national  bank,  authorized  to  issue  currency,  and  he  gave 
certain  reasons  therefor.  My  colleague  is  a  most  excellent  lawyer.  He 
knows  well,  and  so  did  Hamilton  know  well  when  he  made  that  argu 
ment,  that  what  the  Government  does  by  another  it  does  by  itself." 

MR.  BINGHAM  argued  at  great  length  that  Congress  had  the  power  un 
der  the  Constitution  to  authorize  the  issue  of  Treasury  notes,  payable  on 
demand  or  payable  on  time,  redeemable  in  gold  and  silver,  or  other  le 
galized  coin,  and  make  them  a  legal  tender;  and  that  the  present  bill  did 
not  contemplate  any  other  issue.  He  insisted  that  Congress,  by  the  Con 
stitution,  wTas  invested  with  certain  powers,  and  as  to  the  objects,  and 
within  the  scope  of  those  powers,  it  was  sovereign.  That  the  Constitution 
contained  no  words  giving  to  Congress  the  power  to  make  gold  or  silver 
coin,  either  foreign  or  domestic,  a  legal  tender.  It  has  the  power  to  coin 
money,  and  regulate  the  value  thereof  and  of  foreign  coins,  but  the  Con 
stitution  does  not  contain  any  words  declaring  that  these  coins  shall  be  a 
legal  tender.  The  point  I  make  is  this :  Congress  has  power  by  the  Con 
stitution  to  fix  the  standard  value  of  foreign  coin  and  of  domestic  coin, 
and  the  power  to  declare  a  legal  tender,  and  that  these  powers  are  dis 
tinct.  It  may  declare  what  shall  be  a  legal  tender,  either  foreign  coin  or  do 
mestic  coin,  or  paper  representing  coin.  It  is  done  by  act  of  Congress. 
Nothing  ever  was  a  legal  tender  under  the  Constitution  in  discharge  of 
debt  but  by  express  provision  of  an  act  of  Congress.  That  the  power 
"to  regulate  commerce"  confers  on  Congress  the  power  to  declare  what 
should  be  received  in  payment  of  debt.  It  is  not  restricted  to  gold  and 
silver,  but  the  Government  may  issue  Treasury  notes,  redeemable  in  gold 
and  silver,  and  declare  them  a  legal  tender  in  payment  of  debts.  He  de 
nied  that  this  bill  would  "  impair  the  obligation  of  contracts."  There  is 
no  such  limitation  as  that  imposed  by  the  Constitution  upon  the  power  of 
Congress.  It  is  a  limitation  upon  the  States,  and  not  upon  the  United 
States.  It  was  not  by  inadvertence  that  the  framers  of  the  Constitution 
omitted  to  impose  upon  Congress  this  express  restriction  upon  the  States 
against  impairing  the  obligation  of  contracts.  They  proclaimed  in  the 
absence  of  such  limitations  that  whoever,  within  the  jurisdiction  of  the 
United  States,  enters  into  any  mere  money  contract,  either  public  or 
private,  enters  into  it  subject  to  the  sovereign  power  of  the  people,  to 
determine  at  any  time,  by  legislative  enactment,  what  shall  discharge 
it.  It  is  of  the  essence  of  the  contract. 

He  did  not  share  in  any  of  the  fears  entertained  or  intimated  that  the 
people  will  revolt  at  this  measure.  He  had  an  abiding  faith  in  their 
loyalty,  in  their  love  of  law,  in  their  settled  purpose  to  suffer  and  strive, 
to  labor  and  sacrifice,  that  they  may  maintain  their  Government  and 
transmit  it  unimpaired  to  their  children." 

MR.  SHEFFIELD,  of  Rhode  Island,  followed  Mr.  Bingliam  in  a 
lengthy  speech  in  opposition  to  the  legal  tender  clause  in  the 
bill.  He  insisted  that  it  was  unconstitutional,  and  an  odious 
feature.  The  fact  that  you  propose  to  force  these  notes  upon  the 
public  against  the  will  of  the  people  implies  that  force  is  neces 
sary,  in  your  judgment,  to  induce  people  to  take  them.  He  said 


(Ill 

that  if  the  legal  tender  clause  was  stricken  out  he  would  vote  for 
the  bill,  notwithstanding  it  was  objectionable  in  other  respects. 
(Mr.  Sheffield's  speech  will  be  found  reported  in  the  Congressional 
Globe,  page  640-1.) 

On  Wednesday,  February  5th,  several  speeches  were  made  for 
and  against  the  bill,  all  of  which  are  fully  reported  in  the  Con 
gressional  Globe,  but  the  limits  of  this  narrative  will  not  admit  of 
their  being  published  here.  Only  a  brief  sketch  can  be  given  at 
this  time. 

MR.  CHRISFIELD,  of  Maryland,  spoke  for  one  hour  in  opposition 
to  the  legal  tender  clause  in  the  bill. 

"  He  admitted  that  the  accustomed  currency  was  wholly  inadequate  to 
meet  the  exigencies  of  the  war.  The  Government  has  for  many  years 
used  gold  and  silver,  and  it  is  deeply  to  be  regretted  that  it  is  obliged  to 
depart  from  this  desirable  standard.  But  we  are  left  no  option.  The  sup 
ply  of  the  precious  metals  is  inadequate  to  our  wants.  If  all  the  gold  and 
silver  in  the  country  was  placed  at  the  control  of  the  Government,  it 
would  be  received  and  paid  out  twice  in  one  year.  It  is,  therefore,  im 
possible  for  the  Government  to  pay  in  coin.  The  business  of  the  country 
and  the  business  of  the  Government  require  some  substitute  for  coin.  We 
must  therefore  create  a  new  or  vastljr  enlarge  the  existing  currency.  We 
must  therefore  create  a  public  debt,  establish  a  currency,  and  impose  new 
taxes.  This  necessity  being  admitted,  the  only  question  is  how  can  these 
objects  be  accomplished  with  the  least  prejudice  to  the  people,  and  the 
greatest  convenience  to  the  Government?  This  is' a  grave  question — the 
gravest  which  these  times  present.  It  is  the  question,  which  lies  at  the  founda 
tion  of  all  other  questions ;  and  on  its  solution  depends  success  in  every  other 
enterprise.' " 

He  argued  at  great  length  that  the  legal  tender  clause  was  un 
constitutional,  and  that  it  would  not  be  just  to  the  creditor  class 
of  the  community.  He  moved  to  strike  out  this  clause  in  the 
bill,  and  also  the  clause  which  compelled  persons  in  the  employ 
of  the  government  to  receive  the  notes  for  "  salaries,  debts  and 
demands  owing  by  the  United  States,"  so  as  to  make  them  only 
"  receivable  for  all  debts  and  demands  due  the  United  States.  ' 
He  urged  heavy  taxation,  and  was  generalh'  favorable  to  the  bill, 
if  the  amendments  were  made  which  he  proposed,  but  could  not 
vote  for  the  bill  with  the  legal  tender  clause  retained.  (Appen 
dix  to  Congressional  Globe,  page  47-48.) 

MR.   PIKE,  of  Maine,  spoke  for  one  hour  in  favor  of  the  bill. 

"He  argued  that  the  plan  was  expedient  as  well  as  constitutional.  Upon 
the  clause  in  the  bill  providing  that  the  notes  shall  be  a  legal  tender  there 
has  been  much  discussion  here  and  elsewhere.  Its  importance  to  the 
measure  cannot  be  overestimated.  He  regarded  it  as  the  life  of  the  plan. 


TO 

Strike  it  out  and  we  are  but  duplicating  notes  already  at  a  discount.  It  is  real 
ly  the  specie  clause,  and  no  hard  money  man — and  he  claimed  to  be  one — 
should  vote  for  the  issue  of  these  notes  without  it.  It  is  well  known  that 
Mr.  Clay  rested  his  support  of  the  second  bank  upon  the  clause  granting 
Congress  u  the  power  to  make  all  laws  which  shall  be  necessary  and 
proper  for  carrying  into  effect  the  powers,"  expressly  granted  by  the 
eighteenth  section  of  the  first  article.  The  great  patriot  of  the  West,  in 
time  of  profound  peace,  was  disposed  to  consider  the  financial  question  of 
such  magnitude  as  to  plan  a  law  calling  into  being  a  fiscal  agent  among 
those  which  were  "  necessary  and  proper."  With  how  much  more  force 
can  we,  situated  as  it  were,  among  the  dying  agonies  of  the  republic  of  our 
fathers,  acting  as  many  wise  men  believe,  as  the  last  Congress  which,  un 
der  the  Constitution,  shall  represent  the  whole  country,  claim  that  all 
power  which,  under  any  circumstances,  could  be  exercised  by  the  Repre 
sentatives  of  the  people,  should  be  used  now." 

MR.  ALLEY,  of  Massachusetts,  made  a  well-considered  speech 
of  one  hour  in  favor  of  the  bill. 

"The  measure  before  the  House  received  the  approbation  of  his  judgment. 
He  could  see  clearly  that  under  its  provisions  the  rights  of  all  will  be  pro 
tected,  the  prosperity  of  the  whole  people  promoted,  the  credit  of  the 
Government  revived  and  its  power  and  dignity  maintained.  Beneficent 
as  this  measure  is,  as  one  of  relief,  nothing  could  induce  him  to  give  it  his 
sanction  but  uncontrolable  necessity.  While  he  had  always  believed  it  to 
be  the  duty  of  Congress  to  regulate  and  control  the  currency  by  such  leg 
islation  as  would  make  it  of  uniform  value  throughout  the  country,  he 
had  never  regarded  it  as  politic  or  wise  for  the  Government  to  make  is 
sues  of  paper  at  any  time,  except  for  temporary  emergencies.  Disguise 
it  as  you  may,  everybody  knows  that  knows  anything  of  the  laws  of 
trade,  that  to  carry  this  people  through  this  crisis,  collect  $150,000,000  tax, 
maintain  these  vast  expenditures,  and  conduct  the  legitimate  and  neces 
sary  business  of  the  country,  you  must  increase  the  volume  of  the  curren 
cy  to  such  an  amount  as  to  make  it  impossible,  under  the  present  banking 
system,  to  give  it  confidence  upon  the  ground  of  its  immediate  converti 
bility  into  specie.  The  question  then  for  Congress  to  decide,  is  whether 
the  Government  shall  .share  with  the  banks — and  keep  them  in  check — this 
circulation,  or  purchase  their  irredeemable  bills  at  ruinous  rates.  If  you 
do  not  adopt  this  measure  you  will  see  the  country  flooded  with  irredeem 
able  bank  currency,  a  great  deal  of  which  will  be  found,  as  after  the  war 
of  1812,  utterly  worthless.  At  that  time  Government  securities  w  ere  ex 
changed  at  eighty  cents  on  the  dollar  for  worthless  bank  promises,  not 
worth  the  paper  upon  which  they  were  written." 

MR.   ALLEY  concluded  his  remarks  as  follows : 

"Why,  I  ask,  are  government  securities  worth  in  the  market  to-day 
but  ninety  cents  on  the  dollar  in  exchange  for  irredeemable  bank  paper? 
Is  it  because  they  have  confidence  in  bank  paper,  or  because  it  will  com 
mand  specie?  Not  at  all;  but  because  the  bank  paper  will  liquidate  the 
obligations  of  debtors.  It  is  for  you  to  determine  whether  government 
obligations  shall  be  as  good  as  irredeemable  bank  notes;  and  whether  you 
will  allow  these  irredeemable  issues  to  be  preferred  and  take  precedence  of 


n 

a  national  currency  issued  by  a  Government  that  never  repudiated  a  dol 
lar  of  its  indebtedness;  and  a  nation  whose  fabulous  growth,  immense  in 
terests  and  exhaustless  resources,  have  excited  the  wonder  and  admiration 
of  an  astonished  world.  I  confess  that  when  I  rellect  upon  our  condition, 
and  the  misery  and  suffering  which  such  a  policy  inflicts  upon  the  busi 
ness  interests  of  the  country,  I  can  have  no  toleration  for  such  suicidal  ac 
tion.  Congress  has  the  power  to  inaugurate  to-day  a  system  of  financial 
policy,  both  for  Government  and  people,  which  will  establish  our  prosper 
ity  upon  a  firm  foundation,  and  give  strength  and  stability  to  all  our  insti 
tutions  ;  and  I  conjure  you,  by  all  the  memories  of  the  past  and  every  hope 
in  the  future,  not  to  disappoint  in  this  moment  of  peril  the  just  expecta 
tions  of  the  American  people'" 

While  Mr.  ALLEY  was  making  his  speech,  Mr.  Spaulding  .re 
ceived  from  Secretary  Chase  a  private  note,  urging  the  import 
ance  of  having  the  vote  taken  on  the  bill  that  da}-.  It  was  known 
that  Mr.  Horton,  a  prominent  member  of  the  Committee  of  Ways 
and  Means,  desired  to  speak  in  opposition  to  the  bill,  and  that 
several  other  members  desired  to  express  their  views  of  the  meas 
ure  before  the  vote  was  taken. 

The  Treasury  was  nearly  empty.  Money,  or  other  available 
means  must  be  had  right  off.  The  pressing  demands  made  upon 
the  Treasury  could  not  be  put  off  much  longer  without  ruin  to 
the  credit  of  the  Government.  The  Secretary  had  authority  tin 
der  the  Loan  Act,  passed  at  the  extra  session  in  July,  still  remain 
ing,  to  issue  $46,000.000  of  Treasury  notes  bearing  3-65  per  cent, 
interest,  or,  at  his  option,  to  issue  7-30  notes;  but  was  unable  to 
put  out  either  class  of  this  paper  without  a  discount.  The  7-30 
notes  could  not  be  paid  out  from  the  Treasury  except  at  a  dis 
count  of  two  per  cent.,  and  he  could  not  pay  out  the  3-65  notes 
at  all,  because  they  would  not  pass  as  currency,  except  at  a  still 
greater  discount — the  rate  of  interest  was  so  low  that  they  were 
not  desirable  as  an  investment,  and  not  being  a  legal  tender  they 
could  not  be  made  available  at  par  as  a  currency. 

The  following  is  a  copy  of  the  note  received  from  Secretary 
Chase  at  this  time : 

"Such  men  as  Xathaniel  Thayer.  of  Boston;  Alexander  Duncan,  of 
Duncan,  Sherman  &  Co. ;  Shepard  Knapp  and  John  D.  Wolf,  and  numer 
ous  able  and  leading  financial  men,  have  told  me  within  two  days  that  you 
were  perfectly  right,  and  they  are  deeply  anxious  that  the  legal  tender 
clause  should  stand  in  the  bill.  They  say  the  country  is  lost  without  it.'' 

TREASURY  DEPARTMENT,  February  5,  1862. 

MY  DEAR  SIR— I  make  the  above  extract  from  a  letter  received  from 
the  Collector  of  ISTew  York  this  morning.  It  is  very  important  the  bill 
should  go  through  to-day,  and  through  the  Senate  this  week.  The  public 
exigencies  do  not  admit  of  delay. 

Yours  truly. 
HON.  E.  G.  SPAILDING.  S.  P.  CHASE. 


M 

After  deceiving  this  note  from  the  Secretary,  Mr.  Spauiding 
thought  it  desirable  that  a  time  should  be  fixed  for  closing  the  de 
bate  011  the  bill.  He  thought  it  desirable  that  Mr.  Horton  and 
Mr.  Stevens,  members  of  the  Committee  of  Waj^s  and  Means, 
should  speak,  and  such  others  as  were  prepared,  and  that  the  vote 
should  be  taken  the  next  day. 

The  following  proceedings  took  place  in  the  House. 

MK.   WRIGHT  obtained  the  floor. 

MR.  SPAULDING — "I  move  that  the  Committee  rise  with  a  view  of  clos 
ing  this  debate.*' 

MR.  CAMPBELL— "I  hope  this  motion  will  be  agreed  to,  and  that  this 
bill  will  be  pressed  to  a  vote  to-day." 

MR.  SPAULDING — "I  desire  to  say,  in  connection  with  this  motion,  that 
I  have  within  the  last  two  or  three  hours  received  a  note  from  the  Secre 
tary  of  the  Treasury  informing  me  that  it  is  absolutely  necessary  that  we 
should  press  this  measure  to  a  vote  without  further  delay.  Therefore  I 
move  that  the  Committee  rise,  with  a  view  of  closing  debate." 

MR.  HORTON — "  I  wish  to  say  that  the  Committee  of  Ways  and  Means 
do  not  make  this  motion,  and  I  hope  it  will  be  voted  down."  ("Good!" 
"Good!") 

THE  CHAIRMAN — "  The  Chair  would  state  that  this  question  is  not  de 
batable." 

MR.  ENGLISH— '•  I  move  to  lay  the  motion  upon  the  table." 

THE  CHAIRMAN — "That  motion  is  not  in  order  in  committee." 

The  question  being  upon  the   motion  that  the  Committee  rise. 

MR.   ROSCOE  CONKLING  demanded  tellers. 

Tellers  were  ordered,  and  Messrs.  Blair,  of  Missouri,  and 
Thomas,  of  Massachusetts,  were  appointed. 

The  Committee  divided,  and  the  tellers  reported — yeas,  52; 
nays,  62. 

So  the  motion  was  not  agreed  to. 

MR.  SPAULDING — "'With  the  permission  of  the  gentleman  from  Penn 
sylvania,  I  wish  to  make  one  word  of  explanation  in  reference  to  the  mo 
tion  I  made.  The  object  of  the  motion  was  simply  that  we  should  limit 
this  debate,  Avith  a  view  that  we  might  take  a  vote  upon  the  bill  to-mor 
row,  say  at  one  o'clock.  I  expected  to  go  immediately  back  into  commit 
tee  to  allow  the  gentleman  from  Pennsylvania  to  make  his  speech,  and 
then  to  allow  Mr.  Horton  to  speak,  and  then  Mr.  Stevens  to  close  the  de 
bate.  After  that  the  vote  would  be  taken." 

MR.  THOMAS,  of  Massachusetts— "  Then  you  arrange  the  manner  in 
which  speeches  shall  be  made  on  this  floor." 

MR.  LOVEJOY — "  I  would  like  to  know  whether  the  gentleman  from 
New  York  has  any  right  to  farm  out  the  floor?" 

MR.  SPAULDING— "I  make  this  explanation  with  a  view  to  show  the 
House  that  I  have  no  disposition  to  cut  off  any  member  of  the  Committee 
or  to  force  a  vote  unduly.  The  motion  was  made  under  the  necessity 
which,  the  Secretary  of  the  Treasury  assures  us,  exists  for  passing  this 


73 

bill.  I  did  not  make  it  with  a  view  to  cut  off  those  who  are  entitled  to 
speak,  by  courtesy  or  otherwise.  I  think  this  explanation  will  satisfy  the 
House  that  there  was  no  effort  upon  my  part  to  force  a  vote  improperly. 
I  did  not  expect  to  have  a  vote  until  to-morrow  at  one  or  two  o'clock. 
After  the  debate  is  closed,  we  proceed  to  voting  upon  amendments  which 
are  pending,  and  which  may  be  offered,  and  then  five-minute  speeches 
will  be  in  order,  as  upon  other  bills.  Those  speeches  can  be  continued 
until  amendments  are  exhausted." 

MR.  WRIGHT,  of  Pennsylvania,  spoke  for  half  an  hour  in  op 
position  to  the  legal  tender  clause  of  the  bill. 

"  He  was  willing  to  do  almost  anything  that  he  considered  constitution 
al  to  aid  in  putting  down  the  rebellion,  but  he  did  not  feel  justified  in  go 
ing  so  far  as  to  vote  any  such  measure  as  the  legal  tender  bill.  He  con 
curred  in  the  views  of  Mr.  Pendleton  that  it  was  unconstitutional,  that 
nothing  but  gold  and  silver  could  be  made  a  legal  tender  in  payment  of 
debts.  The  people  have  means  enough  in  their  possession,  and  he  was 
willing  to  go  for  taxation  to  the  uttermost  limit,  but  the  time  had  not  yet 
arrived  when  we  should  resort  to  such  an  extreme  measure  as  to  make 
these  notes  a  legal  tender."  ********* 

MR.  HORTON,  of  Ohio,  a  prominent  member  of  •  the  Committee 
of  "Ways  and  Means,  made  a  lengthy  speech  in  opposition  to  the 
legal  tender  clause  in  the  bill. 

"  He  thought  we  were  taking  a  dangerous  departure  from  the  financial 
system  of  the  country.  If  this  bill  passes,  as  he  hoped  it  would  not,  this 
will  be  a  point  from  which  we  shall  date  a  new  financial  system  for  the 
United  States.  "Old  things  will  have  been  done  away;  all  things  will 
have  become  new."  He  thought  the  Loan  bill  and  the  Tax  bill  should 
have  been  passed  through  this  House  side  by  side.  The  Committee  of 
Ways  and  Means  were  convinced  of  the  importance  of  this,  and  were 
desirous  that  it  should  be  done.  (Mr.  Horton  was  one  of  the  sub-com 
mittee  on  the  Tax  bill.)  It  is  from  no  neglect  of  the  Committee  of  Ways 
and  Means,  or  of  the  sub-committee  which  has  had  the  preparation  of  the 
Tax  bill  in  charge,  that  the  Tax  bill  and  Loan  bill  have  not  been  brought 
forward  side  by  side.  The  sub-committee  on  the  Tax  bill  have  worked 
night  and  day ;  and  although  they  do  not  get  much  credit  for  being  indus 
trious,  still  substantial  progress  had  been  made. 

There  were  two  measures  before  the  House,  and  he  proposed  to  discuss 
them.  One  was  tlie  proposition  of  the  gentleman  from  New  York  (Mr. 
Spanieling)  and  the  other  that  of  the  gentleman  from  Vermont  (Mr.  Mor- 
rill).  He  insisted  that  the  three-sixty-five  hundredths  per  cent,  notes, 
proposed  in  Mr.  Merrill's  plan,  possessed  "all  the  characteristics  for  circu 
lation  which  the  Treasury  notes  of  Mr.  Spaulding's  bill  will  have  (save 
the  legal  tender  clause),  and  have  the  important  advantage  of  earning  in 
terest,  and  being  fundable  in  a  more  desirable  stock  for  the  holder,  be 
cause  bearing  a  higher  rate  of  interest,  and  more  advantageous  to  the 
Government,  because  having  only  half  the  time  to  run.  the  Government 
can  redeem  them  at  an  earlier  day."  The  Committee  of  Ways  and  Means 
are  equally  divided  in  regard  to  the  two  bills.  He  Avas  for  the  substitute 
of  Mr.  Merrill,  and  decidedly  opposed  to  the  legal  tender  scheme.  He 
thought  we  had  not  yet  reached  the  point  when  the  Government,  exercis- 


74 

ing  its  high  prerogatives,  as  Mr.  Spaulding  called  them,  can  take  for  its 
use  the  property  of  the  citizen  without  pay.  Necessity  for  this  measure 
has  been  asserted,  but  not  proved.  The  Secretary  of  the  Treasury  thinks 
it  is  necessary,  but  he  thought  he  was  mistaken." 

Mr.  H6rton  argued  at  great  length  against  the  injustice  and  in 
expediency  of  making  the  notes  a  legal  tender,  and  concluded  as 
follows : 

"Mr.  Chairman — I  thank  the  Committee  for  listening  to  me  so  long. 
You  know  that  I  am  unaccustomed  to  speaking  in  the  House,  and  my 
remarks  of  course  have  been  very  desultory.  But  I  wish  to  impress  upon 
the  Committee  that  these  opinions  of  mine  are  not  merely  opinions  super 
induced  by  a  hopeful  temperament.  I  have,  according  to  the  best  of  my 
knowledge,  examined  this  whole  question  in  all  its  bearings,  and  I  am 
willing  to  take  the  responsibility  of  voting  against  this  legal  tender  clause 
of  the  bill  for  the  reasons  that  I  have  given,  and  for  divers  and  sundry 
reasons  which  I  have  not  given.  I  ask  the  Committee  to  pause  before 
they  take  a  step  which,  once  taken,  will  be  irrevocable.  When  you  have 
once  broken  a  pitcher  it  never  becomes  whole  again ;  and  this  fair  fabric 
of  our  untarnished  faith  and  unbounded  wealth  and  credit  ought  not  to  be 
destroyed,  simply  because  our  leaders — men  that  we  have  faith  in— have 
become  alarmed,  and  have  told  us  that  there  is  a  necessity  for  it.  When 
there  is  danger,  Mr.  Chairman,  then  is  the  time  to  be  cool  and  look  about 
you,  and  to  see  that  you  take  no  false  step.  Now  is  that  time,  and  if  you 
take  this  step,  it  is  a  step  downwards,  and  you  will  find  that  to  regain 
the  high  eminence  from  which  we  shall  have  descended  is  a  labor  very  dif 
ficult  to  accomplish." 

MR.   KELLOGG,  of  Illinois,  obtained  the  floor. 

MR.  SPAULDING — "I  ask  the  gentleman  to  give  way  to  me  for  a  few 
moments,  and  then  I  will  move  that  the  Committee  rise," 

MR.  KELLOGG,  of  Illinois — "I  yield  for  that  purpose." 

MR.  SPAULDING — "I  wish  to  make  one  statement  in  reference  to  the 
condition  of  the  Treasury,  which  I  presume  all  will  be  anxious  to  know 
before  we  adjourn.  The  Secretary  of  the  Treasury  has  yet  unexpended 
of  the  loan  of  last  July  $46,000,000.  He  has  a  light  to  issue  this  sum  in 
three  and  sixty-five  hundredths  per  cent,  notes,  or  in  seven  and  three- 
tenths  per  cent  notes ;  but  he  is  unable  to  put  out  either  of  these  classes 
of  paper  without  a  discount.  He  cannot  pay  out  the  seven  and  three- 
tenths  per  cent,  notes  without  a  discount  of  two  per  cent.,  and  he  cannot 
pay  out  the  three  and  sixty-five  one  hundredths  per  cent  notes  because 
they  will  not  be  taken  as  currency,  lids  bill  of  Mr.  Morrill  proposes  sim 
ply  to  repeat  the  authority  to  issue  the  same  kind  of  notes,  which  cannot  be  is 
sued  advantageously  by  the  Secretary  of  the  treasury  at  this  time.  I  move 
that  the  Committee  do  now  rise." 

The  motion  was  agreed  to.       * 

MR.  SPAULDING—"  I  move  that  all  debate  on  House  bill  Xo.  240  be 
closed  in  one  hour  after  its  consideration  shall  have  been  resumed  in  the 
Committee  of  the  Whole  on  the  state  of  the  Union." 


75 

MR.  THOMAS,  of  Massachusetts— "I  suggest  to  the  gentleman  to  modi 
fy  his  motion,  so  as  to  make  it  read  two  hours.'' 

MR.  SPAULDING— "  The  exigencies  of  the  country  are  such  that  I  can 
not  consent  to  do  so  unless  the  House  so  order  it." 

MR.  VALLANDIGHAM — "  I  move  to  amend  the  motion  by  striking  out 
4  one  hour'  and  inserting  '  two  hours.'  " 

The  amendment  was  adopted,  and  the  motion  as  amended  was 
agreed  to. 

PASSAGE    OF    THE    BILL   IN   THE    HOUSE. 

Thursday,  February  6,  1862,  was  an  exciting  and  important 
day  in  the  House.  The  final  vote  on  the  legal  tender  note  bill 
was  to  be  taken,  and  in  anticipation  of  the  vote  there  was  a  very 
full  house.  In  pursuance  of  the  order  passed  last  night,  general 
debate  was  to  be  closed  in  two  hours  after  the  bill  should  be  taken 
up  in  Committee  of  the  Whole.  The  House  on  meeting  and  dis 
posing  of  a  little  preliminary  business,  immediately  resolved  it 
self  into  Committee  of  the  Whole,  and  resumed  the  considera 
tion  of  the  bill.  The  Chairman  announced  that  general  debate 
on  the  bill  would  close  at  ten  minutes  past  two  o'clock  P.  M. 
While  debate  was  continued,  Mr.  Frank  and  Mr.  Colfax,  who 
were  friendly  to  the  bill,  passed  around  the  House  with  a  list, 
making  a  canvass  of  how  the  different  members  would  vote  on 
the  legal  tender  clause.  Upon  footing  up  the  list,  it  was  ascer 
tained  that  there  was  a  large  majority  in  favor  of  making  the 
notes  a  legal  tender. 

MR.  KELLOGG,  of  Illinois,  being  entitled  to  the  floor,  spoke  for 
over  half  an  hour  in  favor  of  the  bill,  not  as  a  peace  measure, 
but  as  a  war  measure.  He  said  : 

**  I  intend  to  detain  the  Committee  but  a  little  while.  I  should  not  have 
sought  the  floor  for  the  purpose  of  offering  any  remarks,  but  for  the  con 
sideration  that,  in  my  judgment,  this  bill  was  being  considered  and  dis 
cussed  as  it  might  with  propriety  have  been  discussed  and  considered  in 
time  of  peace,  and  when  there  was  no  pressing  necessity  for  the  action  of 
Congress  in  placing  the  Government  in  possession  of  all  the  means  and 
powers  that  can  be  safely  gathered  and  exercised  under  the  Constitution. 
If  this  question  came  up  in  ordinary  times,  1  am  frank  to  confess,  that  I 
might,  perhaps,  have  had  some  doubt  of  its  constitutionality  sufficient  to  induce 
me  to  oppose  it.  I  mean  by  that  only  to  say  that  in  time  of  peace,  when  the 
integrity  of  the  Government  is  not  threatened,  I  would  be  more  careful  and 
cautious ;  and  if  I  doubted  the  constitutionality  of  the  measure  1  would  not  vote 
for  it.  But]  sir,  in  this  our  extremity,  while  we  are  struggling  to  perpetuate 
our  Government,  I  am  willing  to  go  to  the  very  verge  of  the  Constitution.  I 
will  go  as  far  as  I  feel  that  the  Constitution  will  permit  me,  to  gather  up 
the  power  and  means  to  carry  on  the  Government  to  that  great  consum- 


76 

mation  which  the  fathers  contemplated  when  they  established  it.  But 
while  I  might  have  some  doubt  in  time  of  peace,  when  the  monetary  af 
fairs  of  the  country  might  safely  be  left  to  work  out  their  own  level  and 
settlement,  of  the  policy  of  this  measure,  I  have  none  now.  What  may 
be  policy  in  the  one  case  may  be  vastly  different  in  the  other. 

I  treat  this,  Mr.  Chairman,  as  emphatically  and  clearly  a  war  measurq. 
It  may  appear  strange  that  a  money  bill  should  be  considered  a  war 
measure,  and  yet  it  is ;  for  it  is  necessary  in  order  to  raise  means  to  carry 
on  the  Government  in  a  war  direction — a  direction  in  which  all  our  meas 
ures  are  or  should  be  tending.  Sir,  we  should  not  disguise  the  fact  of  our 
complications.  We  should  not  deceive  ourselves.  The  worst  deception 
that  men  ever  practice  is  that  practiced  on  themselves.  We  should  not  al 
low  ourselves  to  be  deluded,  now  that  we  have  a  mighty  rebellion — nay, 
revolution — before  us,  and  that  the  Powers  of  the  Old  World,  who  have 
looked  with  a  jealous  eye  on  the  mighty  progress  of  the  Western  Contin 
ent,  are  seeking  occasion  to  cripple  our  onward  and  upward  career.  Talk 
not  of  their  sympathy  for  us.  Our  Government  antagonizes  theirs.  The 
principles  are  different.  We  must  gird  up  our  loins ;  we  must  take  all  the 
power  we  have;  we  must  throw  every  energy,  all  the  means  of  our  Gov 
ernment,  in  the  direction  of  the  war  power,  for  the  purpose  of  self-preser 
vation  and  perpetuation. 

Mr.  Chairman,  AVC  must  look  this  matter  in  the  face,  not  only  of  this 
continent,  but  in  the  face  of  surrounding  nations.  We  must  come  to  the 
conclusion  that  although  the  world  shall  rise  against  us,  this  Republic 
must  and  shall  be  preserved.  All  the  energy  of  the  country,  all  the  blood 
and  treasure  of  the  country,  if  need  be,  must  be  summoned  in  from  every 
part  of  the  land  to  accomplish  that  object.  Sir,  we  must  give  to  this  Gov 
ernment  arms  of  iron  and  muscles  of  steel.  We  must  think  as  with  fire 
and  strike  as  with  spears.  It  is  necessary,  sir,  it  must  be ;  and  if  we  now 
meet  this  emergency  as  trne  men  should  meet  it,  we  shall  succeed.  Ihe 
money  of  the  country  must  come  to  its  aid,  the  powers  of  the  Government  must 
come  to  the  aid  of  the  Administration,  as  well  as  the  strong  hands  and  warm 
hearts  of  our  people. 

Mr.  Chairman,  I  am  pained  when  I  sit  in  my  place  in  the  House  and 
hear  members  talk  about  the  sacredness  of  capital ;  that  the  interests  of  money 
must  not  be  touched.  Yes,  sir,  they  will  vote  six  hundred  thousand  of  the  flower 
of  the  American  youth  for  the  Army,  to  be  sacrificed,  without  a  blush ;  but 
the  great  interests  of  capital,  of  currency,  must  not  be  touched.  We  have 
summoned  the  youth;  they  have  come.  I  would  summon  the  capital;  and 
if  it  does  not  come  voluntarily,  before  this  Republic  shall  go  down,  or  one 
star  be  lost,  I  would  take  every  cent  from  the  treasury  of  the  States, 
from  the  treasury  of  capitalists,  from  the  treasury  of  individuals,  and  press 
it  into  the  use  of  the  Government. 

What  is  capital  worth  without  a  Government  ?  Gentlemen  must  under 
stand  me,  when  I  indulge  in  this  strain  and  speak  in  this  strain  and  speak 
of  this  talk  and  quibble  about  capital,  that  /  do  not  charge  it  upon  the  real 
capitalists  of  the  country,  for  they  do  not  hold  back.  The  true  capitalists  of  the 
country  are  patriotic ;  they  have  furnished  their  means  liberally;  but  there 
is  a  class  of  huckstering  capitalists,  there  is  a  class  of  bankers  proper, 
there  is  a  class  of  brokers,  who  would  make  merchandise  of  the  hopes  and 
fears  of  the  Republic.  * 

It  is  said  there  is  no  power  to  make  these  notes  a  legal  tender,  and  that 


77 

that  is  not  a  legitimate  way  of  expressing  their  value.  If  gentlemen  are 
sure  upon  that  subject,  they  would  do  well  to  run  back  a  little  further 
and  ascertain  whether  there  is  any  power  under  the  Constitution  vested 
in  Congress  to  issue  the  notes  at  all.  And  I  confess  the  argument  of  the 
gentleman  from  Ohio  (Mr.  Pendleton)  ran  back  legitimately  to  that  prop 
osition.  At  least  it  carried  my  mind  back  to  that  proposition  so  fairly  and 
certainly,  that  if  I  found  no  power  to  issue  these  notes,  I  would  have  voted 
against  this  bill.  To  that  my  mind  has  turned  with  every  argument  that 
has  been  made.  I  may  have  been  obtuse,  but  I  confess  that  I  have  come 
to  the  conclusion  that  we  have  the  constitutional  power  to  issue  these 
notes ;  and  having  that  constitutional  power  we  have,  as  an  incident,  to  that 
power,  the  power  also  to  make  them  of  value  by  making  them  a  legal  ten 
der.  The  gentleman  has  voted  more  than  once  for  the  issue  of  Treasury 
notes  to  pay  debts  owing  by  the  Government,  which  were  payable  in 
coin.  If  we  have  power  to  issue  Treasury  notes,  we  have  the  power  to 
fix  the  value  of  the  issue.  It  is  an  incident  to  the  power  of  issuance.  Let 
them  be  issued  as  money,  to  take  the  place  of  money.  Let  there  be  no 
deception ;  let  the  creditors  of  the  Government  know  whether  we  are  to 
palm  off  a  spurious  depreciated  currency  under  the  guise  of  money.  If 
we  have  the  right  to  issue  it,  and  impress  with  the  denomination  of  five 
dollars,  why  not  stamp  upon  its  face  that  it  is  five  dollars  everywhere?" 

MR.  THOMAS,  of  Massachusetts,  made  a  speech  against  the  le 
gal  tender  clause  in  the  bill. 

"He  regarded  this  clause  as  unconstitutional,  unjust,  and  inexpedient. 
The  question  had  never  been  settled  by  judicial  authority,  but  the  weight 
of  reasoning  by  Webster,  Madison,  and  others,  was  strongly  against  the 
validity  of  this  clause  in  the  bill.  He  argued  that  nothing  but  coined 
money  could  be  made  a  legal  tender  in  payments  of  debts ;  that  a  matured 
debt  could  not  be  paid  by  another  promise.  He  regarded  this  clause  in 
the  bill  in  the  nature  of  a  forced  loan,  in  itself  a  confession  of  weakness. 
The  friends  of  this  feature  of  the  bill  admit  the  reluctance  with  which  they 
assent  to  it.  The  only  ground  of  defence  is  its  necessity,  that  no  alterna 
tive  is  left  to  us.  He  deeply  respected  their  motives,  but  could  not  himself 
see  the  necessity."' 

MR.  EDWARDS,  of  New  Hampshire,  made  a  speech  in  favor  of 
the  bill. 

"  We  find  ourselves  confronted  by  an  exhausted  Treasury,  and  without 
the  means  of  meeting  its  existing,  or  its  constantly  accruing  liabilities. 
The  amount  of  floating  liability  now  due  is  $100,000,000.  The  figures  pre 
sented  in  the  opening  speech  of  this  debate  are  immense — almost  appalling. 
Funded  and  floating  it  is  now  $400,000,000 ;  on  the  first  of  July  next  it  will 
be  $650,000,000,  and  if  the  war  continues  $1,200,000,000  in  one  year  from 
that  time.  He  was  in  favor  of  taxation  to  pay  ordinary  expenses  and  in 
terest,  and  ultimately  a  sinking  fund,  but  he  was  in  favor  of  the  issue  of 
Treasury  notes  for  the  purpose  of  meeting  immediate  expenditures,  and  all 
parties  seemed  to  concede  that  Treasury  notes  in  some  form  must  be  is 
sued.  The  bill  reported  by  the  Committee  of  Ways  and  Means,  and  the 
substitute  offered  by  Mr.  Merrill,  may  be  regarded  as  the  only  propositions 
now  before  the  House.  It  is  understood  that  the  other  propositions  will 
be  withdrawn,  and  that  the  dissenters  from  the  bill  will  concentrate  on 


78 

this  substitute.  They  agree  in  the  main  features  of  the  plan,  and  differ 
only  in  details.  He  thought  the  notes  proposed  by  Mr.  Merrill's  plan 
would  not  pass  current  among  the  people  or  the  banks,  but  would  neces 
sarily  depreciate.  The  army  and  navy  might  be  compelled  to  receive 
them  at  par,  because  the  Government  had  nothing  else  to  give  them,  but 
they  could  not  afterwards  pass  them  without  a  large  discount,  which 
would  be  unjust  to  the  men  fighting  our  battles.  He  thought  that  would 
be  a  lack  of  faith  of  the  most  flagrant  description — more  objectionable  by 
far  than  the  legal  tender  clause.  He  also  objected  to  the  high  rates  of  in 
terest  proposed  for  the  bonds  to  be  issued  in  funding  the  notes. 

The  substitute  provides  for  a  depreciated  currency  and  a  high  rate  of  interest 
He  thought  the  currency  proposed  by  the  substitute  would  demoralize  the 
country  as  much,  or  more,  than  the  legal  tender  notes,  and  would  not  pos 
sess  as  many  advantages  to  the  Government. 

The  legal  tender  notes  would  give  instant  means  to  the  Treasury,  so  much 
needed  at  this  time,  without  looking  to  intermediate  negotiation  to  furnish 
them.  The  original  bill  was  the  one  in  all  material  respects  to  be  preferred 
to  the  substitute,  one  of  which  it  is  distinctly  understood  will  be  adopted." 

MR.  RIDDLE,  of  Ohio,  made  a  speech  against  the  propriety  and 
expediency  of  issuing  the  legal  tender  notes. 

"  He  doubted  the  constitutionality  of  the  measure.  He  thought  there 
was  no  real  money,  except  the  metals  coined  in  pursuance  of  law  and  a 
fixed  standard.  Can  money  be  made  of  paper?  Clearly  not,  by  calling  it 
money  or  by  stamping  it  as  money  by  the  Government.  It  would  not 
stand  the  commercial  test.  Paper  has  no  appreciable  intrinsic  value,  and 
its  exchangeable  value  is  of  the  lowest  possible  grade.  The  only  high  de 
gree  of  value  it  can  ever  attain  is  that  which  may  be  imparted  to  it  by  that 
which  is  written  or  printed  upon  it.  It  is  apparent  that  the  whole  quan 
tity  of  the  circulating  medium  must  be  materially  increased,  for  obviously 
that  which  was  only  equal  to  the  demands  of  commerce  and  the  ordinary 
wants  of  the  Government,  is  wholly  inadequate  now  to  the  same  demands 
and  the  extraordinary  wants  of  the  Government.  He  was  opposed  to  the 
legal  tender  clause,  and  would  vote  to  strike  it  out ;  if  that  fails,  I  will 
choose  between  the  bill  and  its  defeat."  (He  voted  for  the  bill  on  its  final 
passage.) 

MR.  BLAKE,  of  Ohio,  spoke  in  favor  of  the  bill. 

"At  no  time  in  the  history  of  our  country  was  the  peril  to  our  free  insti 
tutions  greater  than  now.  The  bill  is  brought  forward  as  a  war  measure, 
to  meet  the  pressing  demands  now  on  the  Treasury.  He  argued  that  it 
wras  constitutional  to  issue  Treasury  notes  and  make  them  a  legal  tender. 
He  insisted  that  it  was  a  necessary  and  proper  means  of  carrying  into  ef 
fect  the  war  powers — to  raise  and  support  armies  and  to  provide  and  main 
tain  a  navy.  We  are  now  in  the  midst  of  a  great  National  exigency,  and 
one,  too,  that  we  must  provide  for;  and  one  that  in  the  application  of  the 
means  there  must  of  necessity  be  great  latitude  of  discretion,  and  denied 
that  legal  tender  paper  money  was  prohibited."  (He  read  from  the  debates 
on  the  formation  of  the  Constitution,  Vol.  5,  page  435.) 

MR.  MASON — "  He  was  unwilling  to  tie  the  hands  of  the  Legislature.  He 
observed  that  the  late  war  could  not  have  been  carried  on  had  such  a  pro 
hibition  existed." 


T9 

MR.  BUTLER—"  That  paper  was  a  legal  tender  in  no  country  in  Europe." 
MR.  MASON— "Was  still  averse  to  tying  the  handa  of  the  Legislature  al 
together.    If  there  was  no  example  in  Europe,  as  just  remarked,  it  might 
be  observed,  on  the  other  side,  that  there  was  none  in  which  the  Govern 
ment  was  restrained  on  this  head." 

MR.  BLAKE  continued  his  argument,  insisting  "that  the  Convention 
which  framed  the  Constitution  did  not  attempt  any  prohibition,  but  left  it 
to  Congress  to  make  Treasury  notes  a  legal  tender  whenever  the  exigency 
should  arise  to  make  it  necessary.  It  was  denied  in  express  terms  to  the 
States,  and  permitted  in  implied  terms  to  Congress.  It  being  constitutional, 
is  it  necessary  to  make  Treasury  notes  a  legal  tender?  By  these  notes  we 
are  enabled  to  pay  our  soldiers,  and  it  is  the  only  means  we  have  to  pay 
them.  Does  not  every  gentleman  know  that  if  these  notes  were  paid  to 
our  soldiers  without  making  them  a  legal  tender,  they  will  immediately  be 
sold  at  a  loss  to  the  soldiers  of  from  four  to  twenty  per  cent.  ?  Ihis  is  not  conjec 
ture:  this  very  thing  ivas  done  here  only  lait  month;  soldiers  were  shaved  by  the 
money-shavers  of  this  District  from  four  to  twenty  per  cext.  on  the  demand  Treas 
ury  notes  they  had  received  from  the  Government.  We  are  not  legislating  for  the 
money-shavers,  who  oppose  this  bill,  but  for  the  people,  the  soldiers,  and  laboring 


MR.  CAMPBELL,  of  Pennsylvania,  spoke  in  favor  of  the  bill. 

"  He  said,  it  is  proper  that  each  member  of  this  House  should,  however 
briefly,  express  his  views  on  the  pending  bill — one  of  the  most,  if  not  the 
most,  important  bills  of  this  season.  To  support  our  armies  in  the  field 
and  navies  on  the  seas  is  a  plain,  patriotic  and  necessary  duty ;  to  do  this 
with  prudence,  economy  and  foresight,  is  the  highest  evidence  of  states 
manship.  That  we  have  vast  National  resources,  all  admit ;  that  the  pub 
lic  debt  has  for  its  security  the  whole  property  of  the  nation,  is  equally 
plain.  The  powers  of  the  Government  are  ample — they  extend  to  life  and 
property.  He  would  fall  short  of  his  duty  in  this  tremendous  issue,  in 
which  free  government  is  on  its  final  trial,  w^ho  would  not,  if  necessary, 
vote  the  last  man  and  the  last  dollar  to  defend  and  perpetuate  the  priceless  inheri 
tance  of  our  fathers. 

I  humbly  conceive  my  duty  to  be  a  plain  one.  The  path  I  have  marked 
out  for  myself  I  will  follow,  let  it  lead  where  it  may.  Whatever  measure 
is  now  or  hereafter  may  become  necessary  to  adopt  in  order  to  maintain  the 
Union  and  perpetuate  free  Government,  that  will  I  support.  Speak  not  to 
me  of  "objections"  and  "scruples"  and  "dangers,"  of  "Constitutional 
objections"  and  "conservative  influences."  Sophistry  is  ever  plausible, 
and  opposition  to  a  just  and  necessary  measure  generally  wears  the  mask 
of  a  "  Constitutional  objection."  The  highest  duty  of  every  member  is  to 
maintain  the  Union — to  sustain  the  Constitution  against  this  causeless  and 
wicked  rebellion ;  and  in  doing  this,  let  us  bear  in  mind  that  the  Constitu 
tion  was  made  for  the  people— to  secure  to  them  and  their  posterity  the 
blessings  of  free  government.  Therefore,  with  me  the  primary  inquiry  is, 
is  this  measure  necessary  to  suppress  the  rebellion  ?  If  it  is,  here  am  I 
ready  to  sustain  it.  It  will  be  found  the  Constitution  gives  ample  power 
to  sustain  this  view. 

The  bill  now  before  the  Committee  is  necessary  to  sustain  the  credit  of 
the  country,  and  to  carry  on  the  war.  It  is  with  reluctance  that  I  have 
come  to  this  conclusion.  I  do  not  like  the  necessity  which  exists  for  the 
legal  tender  clause ;  still  less  do  I  like  to  place  the  issues  of  the  Govern- 


80 

ment  in  the  hands  of  the  brokers  and  money-lenders  of  the  country.  De 
preciated  now,  let  the  legal  tender  clause  fail,  and  mark  the  result  to-mor 
row.  The  Treasury  notes  will  fall  from  four  per  cent,  to  fifteen  and  twen 
ty-five  below  par,  and  the  Government  will  have  to  pay  that  per  centage 
additional  for  every  article  they  purchase.  Your  soldiers  will  be  shaved 
that  amount  on  their  blood-bought  wages,  and  the  country,  flooded  with  a 
vast  amount  of  depreciated  paper,  will  grow  restless  and  discontented 
under  so  fatal  a  mistake.  If  we  make  the  Government  issues  a  legal  ten 
der,  the  demand  for  specie  will  be  so  limited  that  they  will  maintain  their 
value." 

CLOSING    THE    DEBATE    ON   THE    BILL. 

B}T  order  of  the  House  general  debate  was  now  closed.  The 
standing  rules  of  the  House,  however,  provide  that  the  member 
introducing  the  measure  shall  have  the  right,  after  general  debate 
is  closed,  to  speak  one  hour  in  reply  to  adverse  speeches,  in  final!}7 
closing  the  debate.  Mr.  Spaulding,  having  introduced  the  bill,  was 
entitled  to  the  floor  to  close  the  debate.  Mr.  Stevens,  who  had  not 
yet  spoken,  was  desirous  of  expressing  his  views  on  the  measure, 
and  Mr.  Spaulding  was  willing  to  give  him  most  of  the  hour  to 
which  he  was  entitled,  and  intended  to  yield  the  floor  to  him  for 
that  purpose. 

MR.  SPAULDING,  in  closing,  summed  up,  on  his  part,  as  follows : 

"I  have  listened  with  a  great  deal  of  attention  to  the  arguments  and  pro 
positions  which  have  been  submitted  by  the  various  gentlemen  who  have 
addressed,  the  House,  but  I  shall  not  now  make  the  concluding  speech.  I 
shall  leave  it  to  the  able  Chairman  of  the  Committee  of  Ways  and  Means 
to  close  the  debate.  If  I  may  be  indulged,  however,  for  a  few  moments,  I 
desire  to  say,  summing  up,  first :  that  all  agree  that  taxation,  in  various 
forms,  must  be  imposed  to  the  amount  of  at  least  $150,000,000  on  which  to 
rest  the  credit  of  these  notes  and  bonds,  a  sum  sufficient  to  pay  the  ordi 
nary  expenses  of  Government  on  a  peace  footing,  the  interest  on  all  the 
war  debt,  and  a  sinking  fund  to  liquidate  annually  a  portion  of  the  princi 
pal.  Second :  we  all  agree  that  hereafter  the  war  must  be  carried  on  prin 
cipally  upon  the  credit  of  the  Government,  and  that  paper  in  the  form  of 
notes  and  bonds  must  be  issued  to  an  equally  large  amount,  whichever  plan  is 
adopted.  After  deducting  the  sum  raised  by  internal  revenue,  by  direct 
taxation,  and  duties  on  imports,  the  amount  of  paper  to  be  issued  can  only  be 
limited  by  the  actual  expenses  of  the  Government.  The  respective  plans  of 
Messrs.  Vallandigham,  Conkling,  and  Morrill,  require  the  same  amount 
of  paper  to  be  issued  as  the  legal  tender  bill  proposed  by  the  Committee  of 
"Ways  and  Means,  and  supported  by  the  Secretary  of  the  Treasury.  Third : 
the  main  difference  between  the  several  plans  is,  that  the  legal  tender  bill 
stamps  demand  notes  as  money,  with  the  highest  sanction  of  the  Government 
to  circulate  as  a  National  currency,  the  same  as  bank  notes,  in  all  the  chan 
nels  of  trade  and  business  among  all  the  people  of  the  United  States ; 
whilst  all  the  other  plans  proposed  contemplate  the  issue  of  an  inferior 
currency  that  will  not,  in  my  opinion,  circulate  as  money  either  among 
the  banks  or  the  people,  but  will,  on  the  contrary,  be  depreciated  and 


81 

sold  at  a  large  discount  by  all  officers,  soldiers,  and  others  that  are  com 
pelled  to  receive  it  from  the  Government  in  payment  for  services  and 
supplies  furnished.  For  myself,  I  prefer  to  issue  the  demand  notes,  based 
on  adequate  taxation,  and  with  the  highest  legal  sanction  that  can  be  given 
to  them  by  the  Government,  placing  the  soldiers  and  capitalists  all  on  the 
same  footing  in  regard  to  these  notes." 

Mr.  SPAULDING  then  yielded  the  floor  to  Mr.  Stevens. 
Mr.  LOVEJOY  objected  to  the  gentleman  yielding  the  floor. 

THE  CHAIRMAN — "If  objection  is  made,  the  gentleman  from  Pennsyl 
vania  cannot  occupy  the  floor.  The  gentleman  from  New  York  cannot 
yield  the  floor  to  him,  except  by  unanimous  consent." 

Mr.  MORRILL — "I  trust  no  objection  will  be  made;  only  the  same  time 
will  be  consumed." 

Mr.  LOVEJOY— "Well,  I  will  withdraw  the  objection." 

MR.   STEVENS'  ADDRESS. 

"MR.  CHAIRMAN — This  bill  is  a  measure  of  necessity,  not  of  choice. 
No  one  would  willingly  issue  paper  currency  not  redeemable  on  demand, 
and  make  it  a  legal  tender.  It  is  never  desirable  to  depart  from  the 
circulating  medium  which,  by  the  common  consent  of  civilized  nations, 
forms  the  standard  value.  But  it  is  not  a  fearful  measure,  and  when 
rendered  necessary  by  exigencies  it  ought  to  produce  no  alarm. 

The  late  administration  left  us  a  debt  of  about  $100,000,000,  and 
bequeathed  to  us  also  an  expensive  and  formidable  rebellion.  This  com 
pelled  Congress,  at  the  extra  session,  to  authorize  a  loan  of  $250,000,000; 
$100,000,000  of  these  were  taken  at  7  3-10  per  cent.,  and  $50,000,000  six 
per  cent,  bonds  at  a  discount  of  over  $5,000,000;  $50,000,000  were  used  in 
demand  notes,  payable  in  coin,  leaving  $50,000,000  undisposed  of.  Before 
the  Banks  had  paid  much  of 'the  last  loan  they  broke  down  under  it  and  sus 
pended  specie  payment.  They  have  continued  to  pay  that  loan,  not  in  coin,  but 
in  demand  notes  of  the  Government;  that  has  kept  them  at  par,  but  this  last 
of  the  loan  u-as  paid  yesterday,  and  on  the  same  day  the  banks  refused  to  receive 
them.  Ihey  must  now  sink  to  a  depreciated  currency.  The  remaining  $50,- 
000,000  the  Secretary  of  the  Treasury  has  been  unable  to  negotiate.  A 
small  portion  of  it,  say  $10,000,000,  has  been  issued  at  7  3-10  per  cent,  in 
payment  of  debts. 

He  estimated  the  present  floating  debt  at  $180,000,000;  daily  expenses, 
$2,000,000;  to  carry  us  to  next  meeting  of  Congress,  $600,000,000  more. 
That  if  sufficient  six  per  cent,  bonds  were  forced  011  the  market  to  pay 
our  expenses  up  to  December,  or  $700,000,000,  as  the  money  should  be 
wanted,  he  thought  they  would  sell  as  IOWT  as  sixty  per  cent.,  as  in  the 
last  English  war;  and  even  then  it  would  be  impossible  to  find  payment 
in  coin.  A  large  part  of  it  must  be  accepted  in  depreciated  notes  of  sus 
pended  banks,  for  no  one  expects  the  resumption  of  specie  payments  until 
the  close  of  the  war. 

Without  the  legal  tender  clause  the  notes  could  not  be  kept  at  par. 
Brokers,  bankers,  and  others  would  depreciate  them.  The  National  Bank 
scheme  recommended  by  the  Secretary  might,  in  ordinary  times,  be  very 
useful,  but  while  the  banks  are  under  suspension  it  was  not  easy  to  see  • 
how  it  would  relieve  the  Government.  They  would  have  the  circulation 
without  interest,  and  at  the  same  time  would  draw  interest  on  the  bonds, 


82 

and  afford  no  immediate  relief.  He  thought  the  Government  should  have 
the  benefit  of  the  circulation  of  legal  tender  notes,  and  did  not  see  how 
we  could  get  along  in  any  other  way. 

He  argued  in  favor  of  the  constitutionality  of  the  legal  tender  clause, 
and  that  it  was  a  necessary  and  proper  measure  at  this  time.  In  short, 
whenever  any  law  is  necessary  and  proper  to  carry  into  execution  any 
delegated  power,  such  law  is  valid.  That  necessity  need  not  be  absolute, 
inevitable,  and  overwhelming — if  it  be  useful,  expedient,  profitable,  the 
necessity  is  within  the  constitutional  meaning.  Whether  such  necessity 
exists  is  solely  for  the  decision  of  Congress.  Their  judgment  is  absolute 
and  conclusive.  If  Congress  should  decide  this  measure  to  be  necessary 
to  a  granted  power,  no  department  of  the  Government  can  rejuclge  it. 
The  Supreme  Court  might  think  the  judgment  of  Congress  erroneous,  but 
they  could  not  review  it.  Now,  it  is  .for  Congress  to  determine  whether 
this  bill  is  necessary  "to  raise  and  support  armies  and  navies,  to  borrow 
money,  and  provide  for  the  general  welfare."  They  are  all  granted 
powers.  It  is  for  those  who  think  that  it  is  not  "necessary,  useful  and 
proper,"  to  propose  some  better  means,  and  vote  against  this;  if  a  major 
ity  think  otherwise,  its  constitutionality  is  established. 

If  constitutional,  is  it  expedient?  It  is  objected  by  the  gentleman  from 
Ohio,  that  the  legal  tender  clause  would  depreciate  the  notes.  All  admit 
the  necessity  of  the  issue ;  but  some  object  to  their  being  made  money. 
It  is  not  easy  to  perceive  how  notes  issued  without  being  made  immedi 
ately  payable  in  specie,  can  be  made  any  worse  by  making  them  a  legal 
tender.  And  yet  that  is  the  whole  argument,  so  far  as  expediency  is  con 
cerned.  Other  gentlemen  argued  that  this  would  impair  contracts,  by 
making  a  debt  payable  in  other  money  than  that  which  existed  at  the 
time  of  the  contract,  and  would  so  be  unconstitutional.  Where  do  gentle 
men  find  any  prohibition  on  Congress  against  passing  laws  impairing 
contracts  ?  There  is  none,  though  it  would  be  unjust  to  do  it.  But  this 
impairs  no  contract.  All  contracts  are  made  not  only  with  a  view  to  present 
laws,  but  subject  to  the  future  legislation  of  the  country.  We  have  more  than  once 
changed  the  value  of  coin.  Neither  our  gold  nor  our  silver  coin  is  as  val 
uable  as  it  was  fifty  years  ago.  Congress  in  1853,  I  believe,  regulated 
the  weight  and  value  of  silver.  They  debased  it  over  seven  per  cent., 
and  made  it  a  legal  tender.  Who  ever  pretended  that  that  was  uncon 
stitutional?  The  gentlemen  from  Vermont  (Mr.  Morrill),-and  Ohio  (Mr. 
Pendleton),  think  it  an  ex  potf  facto  law.  It  is  not  wonderful  that  my  dis 
tinguished  colleague,  not  being  a  professional  lawyer,  should  not  be  aware 
that  the  ex  po^t  facto  laws  prohibited  by  the  Constitution  refer  only  to 
crimes  and  misdemeanors,  and  not  to  civil  contracts.  The  gentleman 
from  Ohio  no  doubt  knew,  but  forgot  it. 

Gentlemen  are  clamorous  in  favor  of  those  who  have  debts  due  them, 
lest  the  debtor  should  the  more  easily  pay  his  debt.  I  do  not  much  sym 
pathize  with  such  importunate  money-lenders.  But  widows  and  orphans 
are  interested  and  in  tears,  lest  their  estates  should  be  badly  invested.  I  pity  no 
one  who  has  his  money  invested  in  United  /States  bonds,  payable  in  gold  in  twenty 
years,  with  interest  semi-annually.  But  while  these  men  have  agonized 
bowels  over  the  rich  man's  case,  they  have  no  pity  for  the  poor  widow, 
the  suffering  soldier,  the  wounded  martyr  to  his  country's  good,  who 
must  receive  these  notes  without  legal  tender  or  nothing,  and  who  must 
give  half  of  it  to  the  Shylocks  to  get  the  necessaries  of  life.  Sir,  I  wish 


83 

no  injury  to  any,  nor  with  our  bill  could  any  happen ;  but  if  any  must 
lose,  let  it  not  be  the  soldier,  the  mechanic,  the  laborer  or  the  farmer. 

Let  me  relate  the  various  projects.  Ours  proposes  United  States  notes, 
secured  at  the  end  of  twenty  years  to  be  paid  in  coin,  and  the  interest  raised  by 
taxation  semi-annually ;  such  notes  to  be  money,  and  of  uniform  value  through 
out  the  Union.  Xo  better  investment,  in  my  judgment,  can  be  had;  no 
better  currency  can  be  invented.  The  amendment  of  the  gentleman  from 
Ohio  (Mr.  Vallandigham)  proposes  the  same  issue  of  notes,  but  objects  to 
a  legal  tender ;  but  does  not  provide  for  their  redemption  on  demand  in 
coin.  He  fears  our  notes  would  depreciate.  Let  him  who  is  sharp 
enough  to  see  it  instruct  me  how  notes  that  every  man  must  take  are 
worth  less  than  the  same  notes  that  no  man  need  take,  and  few  would, 
being  irredeemable  on  demand.  But  he  doubts  its  constitutionality.  He 
who  admits  our  power  to  emit  bills  of  credit,  nowhere  expressly  authorized  by  the 
Constitution,  is  a  sharp  and  unreasonable  doubter  when  he  denies  the  power  to 
make  them  a  legal  tender. 

The  proposition  from  the  gentleman  from  Xew  York  (Mr.  Roscoe 
Conkling)  authorizes  the  issuing  of  seven  per  cent,  bonds,  payable  in 
thirty-one  years,  to  be  sold  ($250,000,000  of  it)  or  exchanged  for  the  cur 
rency  of  the  banks  of  Boston,  New  York  and  Philadelphia. 

Sir,  this  proposition  seems  to  me  to  lack  every  element  of  wise  legisla 
tion.  Make  a  loan  payable  in  irredeemable  currency,  and  pay  that  in  its 
depreciated  condition  to  our  contractors,  soldiers  and  creditors  generally ! 
The  banks  would  issue  unlimited  amounts  of  what  would  become  trash, 
and  buy  good  hard-money  bonds  of  the  nation.  Was  there  ever  such  a 
temptation  to  swindle  ? 

He  further  proposes  to  issue  $200,000,000  United  States  notes,  redeem 
able  in  coin  in  one  year.  Does  not  the  gentleman  know  that  such  notes 
must  be  dishonored,  and  the  plighted  faith  of  the  Government  broken? 
No  one  believes  that  we  could  then  pay  them,  and  it  would  run  down  at 
once.  If  we  are  to  use  suspended  notes  to  pay  our  expenses,  why  not 
use  our  own  ?  Are  they  not  as  safe  as  bank  notes  ?  During  the  suspen 
sion,  the  Government  would  have  the  benefit  of  the  whole  circulation, 
without  interest,  until  they  were  funded — that  is,  the  interest  of  all  we 
could  keep  out  would  accrue  to  the  Government.  If  the  $150,000,000 
were  constantly  afloat,  it  would  be  a  loan  to  the  Government,  without 
interest,  to  that  amount,  $9.000,000  a  year.  But  if  we  used  the  suspended 
paper  of  the  banks  our  bonds  would  bear  interest  from  the  instant  we  got 
their  notes — a  good  thing  for  suspended  banks.  Besides,  the  Government 
would  have  the  benefit  of  all  the  lost  and  destroyed  notes — a  considerable 
item. 

Last  comes  the  substitute  of  the  minority  of  the  Committee  (introduced 
by  Mr.  Morrill).  I  look  upon  it  as  a  curiosity.  It  proposes  to  issue 
United  States  notes,  not  a  legal  tender,  bearing  an  interest  of  three  and 
sixty-five  hundredths  per  cent.,  and  fundable  into  seven  and  three-tenths 
per  cent,  bonds,  but  not  payable  on  demand,  but  at  the  pleasure  of  the 
United  States.  This  gives  one  and  three-tenths  per  cent,  higher  interest 
than  our  loan,  and  not  being  redeemable  on  demand,  would  share  the 
fate  of  all  non-specie-paying  notes  not  a  legal  tender.  But  the  ingenious 
minority  have  invented  a  kind  of  currency  never  before  known — a  circula 
tion  bearing  interest.  Bonds  or  notes  intended  for  investments  bear  inter 
est,  but  no  one  expects  they  will  be  used  as  currency ;  whether  in  the 
shape  of  bonds  or  notes,  they  will  be  used  only  as  investments,  or  as 


84: 

pledges  on  which  to  procure  loans.  Suppose  a  tailor,  shoemaker,  or  other 
mechanic,  or  laborer,  were  to  take  one  of  these  bills,  and  in  a  wreek  he 
should  wish  to  use  it  in  market  or  store,  or  elsewhere,  he  must  sit  down 
and  calculate  the  interest  on  the  days  he  has  had  it  to  find  its  value.  This 
would  be  rather  inconvenient  on  a  frosty  day.  This  currency  would  make 
it  necessary  for  every  man  to  carry  an  arithmetic  or  interest  table  with 
which  to  guage  the  value  of  the  circulating  medium.  Gentlemen  must 
see  howr  ridiculous,  if  not  impracticable,  this  scheme  is. 

Here,  then,  in  a  few  words,  lies  your  choice.  Throw  bonds  at  six  or 
seven  per  cent,  on  the  market  between  this  and  December,  enough  to 
raise  at  least  $600,000,000 — about  this  sum  is  already  appropriated,  $557,- 
000,000 — or  issue  United  States  notes,  not  redeemable  in  coin,  but  fundable 
in  specie-paying  bonds  at  twenty  years ;  such  notes  either  to  be  made  a  legal 
tender,  or  to  take  their  chance  of  circulation  by  the  voluntary  act  of  the 
people. 

I  maintain  that  the  highest  sum  you  could  sell  your  bonds  at  would  be 
seventy-live  per  cent.,  payable  in  currency  itself  at  a  discount.  That 
would  produce  a  loss  which  no  nation  or  individual  doing  a  large  business 
could  stand  a  year. 

I  contend  that  I  have  shown  that  such  issue,  without  being  made  money, 
must  immediately  depreciate,  and  would  go  on  from  bad  to  worse.  I  Hat 
ter  myself  that  I  have  demonstrated,  both  from  reason  and  undoubted 
authority,  that  such  notes,  made  a  legal  tender  and  not  issued  in  excess  of 
the  demand,  will  remain  at  par  and  pass  in  all  transactions,  great  and 
small,  at  the  full  value  of  their  face ;  that  we  shall  have  one  currency  for 
all  sections  of  the  country  and  for  every  class  of  people,  the  poor  as  well 
as  the  rich. 

Some  gentlemen  are  as  much  frightened  as  if  this  were  an  unwonted 
apparition,  for  the  first  time  prowling  forth  to  swallow  the  rich  creditor 
and  smouse  the  poor  debtor.  ]Sro  nation,  it  is  said,  has  ever  tried  anything 
like  it. 

Let  us  look  at  the  greatest  and  wisest  commercial  nation  in  the  world. 
In  1797  England  was  struggling  for  existence  against  armed  Europe.  She 
needed  money,  as  we  do  now.  She  found  it  impossible  to  borrow.  Gold 
was  likely  to  leave  the  country.  She  passed  a  law  prohibiting  the  Bank  of 
England  from  paying  coin  for  her  notes  until  six  months  after  the  final 
ratification  of  peace.  That  law  remained  in  force  till  1823.  It  is  said  she 
did  not  make  those  notes  a  legal  tender.  She  provided  that  whoever 
refused  to  take  them  for  a  debt  should  have  no  remedy  for  its  collection : 
and  that  a  plea  of  such  tender  should  be  a  bar  to  the  action.  This,  I  think, 
is  the  most  stringent  legal  tender;  yet  those  notes  never  depreciated  to 
any  great  extent." 

Mr.  VALLANDIGHAM — "Did  they  not  depreciate  twenty  per  cent.  ?" 

Mr.  STEVENS — "Ko,  sir;  at  no  time  after  they  were  made  a  legal  tender 
did  they  depreciate  twenty  per  cent." 

Mr.  VALLANDIGHAM— "I  have  the  authority  of  Mr.  Canning,  which 
I  think  is  quite  as  good  as  that  of  Mr.  McCulloch.  They  were  receivable 
all  the  time  for  Government  dues." 

Mr.  STEVENS — "Yes,  sir;  but  they  still  run  down  until  they  were  made 
a  legal  tender,  and  after  that  they  never  depreciated  a  single  dollar.  Had 
they  been  made  an  absolute  tender,  they  would  not  have  depreciated  a 
farthing.  But  now,  in  times  of  peace,  the  notes  of  the  Bank  of  England  are 


85 

a  legal  tender  in  all  the  vast  business  of  that,  nation,  and  in  every  place,  except  at 
the  counter  of  the  bank.  What  else  are  Bank  of  England  notes  than  bills  of 
credit  of  the  Government?  Her  whole  capital  consists  of  Government 
securities,  and  her  issues  are  based  on  that  alone.  Prussia  holds  the 
currency  in  paper  issueable  by  Government  alone,  and  is  always  at  par. 
What  becomes  of  the  fine-spun  theories  of  the  opponents  of  this  bill  ?  I 
think  they  have  distressed  themselves  very  unnecessarily ;  and  yet,  gen 
tlemen  have  shown  all  the  contortions,  if  not  the  inspirations,  of  the  Sibyl, 
lest  Government  should  make  these  notes  a  uniform  currency,  rather  than 
leave  them  to  be  regulated  by  sharks  and  brokers.  I  look  upon  the  imme 
diate  passage  of  the  bill  as  essential  to  the  very  existence  of  the  Government. 
Reject  it,  and  the  financial  credit,  not  only  of  the  Government,  but  of  all 
the  great  interests  of  the  country,  will  be  prostrated." 

MR.  CHAIRMAN — "Let  me  say  in  conclusion,  that  unless  this  bill  is  to 
pass  with  the  legal  tender  clause  in  it,  it  is  not  desirable  to  its  friends,  or 
to  the  Administration,  that  it  should  pass  at  all,  and  those  who  think  as  I 
do  will  have  to  vote  against  it,  if  it  should  be  thus  mutilated  and  emascu 
lated.  If  it  is  to  be  defeated,  I  should  be  glad  if  we  had  the  power  which 
they  have  in  the  British  Parliament— to  resign  our  places  on  the  Com 
mittee  of  Ways  and  Means,  and  leave  it  to  those  who  oppose  this  bill 
to  mature  some  other  measure.  So  far  as  I  am  concerned,  I  shall  be 
modest  enough  not  to  attempt  any  other  scheme.  The  Committee  of 
Ways  and  Means  have  labored  in  the  preparation  of  this  measure 
anxiously,  and  to  the  best  of  their  poor  abilities.  We  are  not  infallible. 
We  do  not  come  near  it.  I  am  but  poorly  qualified  for  anything  of  this 
kind.  But  we  have  given  it  our  most  anxious  consideration,  and  have 
consulted  those  wrhom  we  believed  to  be  the  best  qualified  to  advise  us. 
We  have  sought  to  harmonize  conflicting  views  in  the  substitute  which 
the  majority  of  the  Committee  have  prepared,  and  we  hope  it  will  pass. 
We  believe  that  the  credit  of  the  country  will  be  sustained  bj^  it,  that 
under  it  all  classes  will  be  paid  in  money  which  all  classes  can  use,  and 
that  it  will  confer  no  advantage  on  the  capitalist  over  the  poor  laboring 
man.  If  this  bill  shall  pass,  I  shall  hail  it  as  the  most  auspicious  measure 
of  this  Congress ;  if  it  should  fail,  the  result  will  be  more  deplorable  than 
any  disaster  which  could  befall  us." 

At  the  conclusion  of  Mr.  Stevens'  speech  the  Chair  announced 
that  general  debate  was  closed.  Amendments  were  now  in  order, 
and  under  the  rules  of  the  House,  five-minute  speeches  could  be 
made  in  favor  of,  or  in  opposition  to,  each  amendment  proposed. 
Under  this  rule,  several  short  speeches  were  made  by  members 
who  had  not  an  opportunity  to  speak  during  the  general  debate. 

Mr.  F.  A.  CONKLING,  who  opposed  the  legal  tender  clause  in 
the  bill,  read  an  extract  from  an  eminent  citizen  of  New  York,  as 
follows : 

"The  advocates  of  a  paper  substitute  may  find  an  argument  in  the 
necessities  of  the  crisis,  but  are  certainly  not  guided  by  the  light  of 
experience,  if  they  recur  to  the  fact  that  in  1814  a  Boston  bank  note  was 
capable  of  buying  twice  its  nominal  value  in  Treasury  notes  (not  a  legal  tender). 

I  had  some  little  experience  of  the  working  of  'paper  vs.  gold,'  in 
Denmark,  in  1813,  when  their  currency,  which  was  printed  on  blue  paper. 


86 

depreciated  to  such  an  extent  that  the  King,  to  remedy  the  evil,  issued  a 
new  currency,  printed  on  white  paper,  accompanied  by  an  edict  that  one 
rix  dollar  of  the  new  emission  should  be  regarded  in  all  transactions  as 
worth  six  of  the  old,  and  taken  as  a  legal  tender,  which  required  an 
amount  of  faith  equal  to  that  which  was  exacted  by  Lord  Peter  of  Martin 
and  Jack :  that  they  should  believe  '  a  loaf  of  brown  bread  to  be  a  shoulder 
of  mutton,'  or  suffer  for  their  incredulity. 

This  arbitrary  edict  led  to  the  ruin  of  many  creditors,  especially  mort 
gagees,  who  were  thus  compelled  to  receive  'rags  and  lampblack'  in 
satisfaction  of  debts  contracted  in  gold  and  silver. 

At  that  time  I  had  bargained  with  the  King's  painter,  in  Copenhagen, 
to  take  my  portrait  (a  half  length,  still  in  my  possession),  for  three  hundred 
and  six  dollars,  the  frame  included.  Such  was  the  rapid  decline  in  the 
paper  currency  of  the  Government,  that  when  it  was  completed  I  pur 
chased  with  nine  Spanish  milled  dollars  the  three  hundred  and  six  dollars 
to  pay  for  the  portrait  and  frame ;  and  such  was  the  faith  and  loyalty  of 
the  painter,  that  he  believed,  or  was  bound  by  law  to  believe,  that  the  one 
currency  was  just  as  good  as  the  other!  Being  in  London  during  the 
same  year,  I  was  guilty  of  the  felonious  act  of  selling  my  gold  guineas  for 
twenty-seven  shillings  in  paper,  while  honest,  patriotic  and  credulous 
John  Bull  insisted  that  in  theory  their  value  was  the  same ;  and  Right 
Honorable  the  Chancellor  of  the  Exchequer  could  cause  the  transportation 
to  Botany  Bay  of  any  man  who  practically  proved  the  contrary." 

Mr.  HUTCHINGS — "I  would  like  to  inquire  as  to  the  occupation  of  the 
gentleman  who  wrote  that  letter?"1 

[Here  the  hammer  fell.] 

Mr.  CRISFIELD — "In  order  to  accommodate  what  seems  to  be  the  wish 
of  the  Committee,  or  some  members  of  it,  I  propose  to  modify  my  amend 
ment  by  confining  the  motion  to  strike  out  to  the  words,  "and.  shall  also 
be  lawful  money  and  a  legal  tender  in  payment  of  all  debts,  public  and 
private,  within  the  United  States." 

Mr.  SHELLABARGER— -"  Mr.  Chairman,  1  rise  to  oppose  the  pending 
amendment.  I  did  desire  to  submit  to  the  Committee  some  views  touch 
ing  this  measure  when  we  were  in  general  debate,  but  omitted  to  do  so  in 
deference  to  the  more  matured  views  which  other  members  of  the  Com 
mittee  desired  to  submit.  I  propose  to  occupy  the  few  minutes  I  have, 
in  making  some  statements  in  relation  to  the  charges  of  bad  faith  and 
injustice  which  have  been  so  persistently,  earnestly,  and,  doubtlessly, 
sincerely  made  by  the  opponents  of  the  bill. 

Now,  sir,  I  think  it  must  be  plain,  beyond  all  cavil,  that  if  these  notes, 
proposed  to  be  issued  under  this  bill,  are  made  of  the  value  imposed  upon 
them  by  law,  so  that  they  will  be  to  the  citizen  the  true  and  real  repre 
sentatives  of  that  amount  of  the  intrinsic  ivealth  of  the  country,  ivhich  is 
stamped  by  law  upon  them  as  their  nominal  value,  then  there  can  be  no  practical 
injury,  in/justice,  or  bad  faith  in  the  law  which  makes  them  pay  a  debt  precisely 
equal  to  that  real  value  or  wealth  of  the  country,  which  that  note,  so  made  a  ten 
der,  represents.  It  is,  of  course,  not  my  purpose  now  either  to  discuss  or 
state  those  views  by  which  others  see  in  this  measure — as  distinguished 
from  those  they  advocate — only  disaster,  in  the  shape  of  '  destruction  of 
all  standards  of  value;'  in  the  'inflation  of  the  business  and  the  prices  of 
the  country ;'  in  disordering  the  '  operations  of  trade  and  commerce ;'  and 
in  the  ultimate  'bankruptcy'  of  the  Government  and  of  the  people*  I 


87 

have  no  doubt  this  cry  is  made  sincerely  by  many,  and  perhaps  it  is 
believed  by  all  who  make  it.  I  do  not  discuss  the  sources  and  reasonable 
ness  of  this  cry  of  alarm,  but  only  wish  to  present  a  parallel  to  it,  and 
say  that  this  cry  is,  to  my  mind,  as  unreasonable  as  that  other  to  which  I 
allude.  I  find  that  parallel  in  the  history  of  the  growth  of  the  debt  of 
England;  and  in  the  light  of  that  history,  I  declare  that  this  cry  of 
'bankruptcy'  and  national  disaster  and  ruin  is  utterly  unreasonable,  and 
just  now  most  pernicious. 

Sir,  the  history  of  the  growth  of  that  debt,  which  one  of  the  great 
Commoners  of  England  calls  "the  greatest  prodigy  that  ever  perplexed 
the  sagacity  and  confounded  the  pride  of  statesmen  and  philosophers,' 
furnishes  as  conclusive  refutations  of  the  theories  and  predictions  of  our 
alarmists  of  this  House,  as  it  did  in  the  past  of  other  Parliaments. 

Sir,  at  the  end  of  the  war  of  England  with  Louis  XIV,  in  1713,  the 
debt  of  England  was,  in  round"  numbers,  $250,000,000.  But,  sir,  at  that 
period,  not  pot-house  politicians  merely,  but  profound  thinkers,  declared 
the  Government  permanently  crippled.  But  while  these  were  engaged  in 
proving  the  nation  ruined,  the  nation  was  growing  richer  and  richer. 
Soon  came  that  war  which  was  ended  by  the  peace  of  Aix  la  Chapelle ; 
and  the  national  debt  had  come  to  be  $400,000,000  in  1748.  Xow,  again, 
historians,  statesmen  and  economists  concurred  in  declaring  that  the  case 
of  England  was  certainly  now  desperate;  but  now  again  the  nation  per 
sisted,  although  demonstrated  by  the  books  to  be  a  bankrupt,  in  becoming 
far  richer  than  in  an y  period  of  her  history.  Soon  the  nation  became 
again  involved  in  the  continental  Avars  of  the  reign  of  George  II,  and  at 
the  end  of  Chatham's  administration,  at  the  period  of  1760,  the  national 
debt  came  to  be  $700,000,000.  Then,  again,  it  is  declared  that  both  men 
of  theory  and  of  business  united  in  declaring  that  now,  at  all  events,  the 
fatal  day  had  certainly  arrived.  Adam  Smith,  the  father  of  politico-eco 
nomical  science,  thought  the  limit  had  been  reached,  and  an  increase  of 
the  debt  would  be  fatal.  David  Hume,  the  profoundest  man  of  his  age, 
declared  it  would  have  been  better  that  England  had  been  conquered  and 
crushed  by  Prussia  and  Austria,  than  b}^  debts  for  which  all  the  revenues 
of  the  Kingdom  north  of  Trent  and  west  of  Reading  were  mortgaged. 
He  said  the  madness  of  England  exceeded  that  of  the  crusaders.  Richard 
Cceur  de  Lion  and  St.  Louis  had  not  gone  in  the  face  of  arithmetic. 
England  had.  You  could  not  prove  that  the  road  to  Paradise  was  not 
through  the  Holy  Land;  but  you  could  prove  that  the  road  to  national 
ruin  wTas  through  a  national  debt.  But  still,  in.  defiance  of  Hume  and 
Smith,  and  even  Burke,  the  nation  would  live  and  grow  richer,  and  pay 
the  interest  on  its  public  debt. 

Then  came  George  Grenville's  policy  to  tax  the  colonies  of  America  to 
help  pay  the  interest  on  this  debt,  and  brought  on  our  war  of  the  Revolu 
tion.  In  that  England  lost  the  colonies,  and  found  an  addition  to  her 
public  debt  of  $500,000,000— making  the  aggregate,  at  the  time  of  the 
treaty  of  peace,  $1,200,000,000.  Again  England  was  pronounced  hopeless ; 
but  again  she  continued  to  be  more  prosperous  than  ever  before. 

Then  came  the  wars  growing  out  of  the  French  Revolution :  and  the 
debt  of  England  ran  up  to  $4,000,000,000.  Again  the  cry  of  despair  and  of 
bankruptcy  wras  louder  than  ever;  but  also  again  the  cry  was  false  as 
ever;  and  the  interest  on  the  debt  of  England  not  only  continued  to  be 
paid  to  the  day  at  the  bank,  but  such  was  her  prosperity  that  at  the  close 


88 

of  these  French  wars,  her  people  expended  for  railroads  in  the  island,  in  a 
few  years,  more  than  $1,200,000,000! 

Such  is  a  sketch  of  the  history  of  the  debt  of  England,  and  such  the 
refutation  furnished  by  the  logic  of  history  to  the  logic  of  abstract  reas 
oning,  however  profound. 

A  great  historian  and  a  great  commoner  of  England  declares  that  all 
these  cries  of  bankruptcy  and  ruin  were  based  on  a  double  fallacy.  They 
who  raised  these  cries  imagined  that  there  was  an  exact  analogy  between  the  case 
of  an  individual  who  is  in  debt  to  another,  and  the  case  of  a  society  which  is  in 
debt  to  itself;  and  they  also  forget  that  other  things  grew  as  well  as  the  debt. 

Sir,  I  do  not  make  this  allusion  to  the  debt  of  England  to  show  that  'a 
national  debt  is  a  national  blessing,'  nor  to  indicate  that  this  nation  ought 
permanently  to  depart  from  its  old  and  traditional  policies  of  avoiding 
public  debt  and  direct  taxation.  I  do  not  think  we  either  ought  to  or 
will.  But,  sir,  this  parallel  between  the  alarms  of  this  day  and  this  coun 
try,  and  those  of  the  past  in  another  country,  is  only  introduced  to  indicate 
the  strange  infirmities  of  vision  in  all  these  prophets  of  evil,  and  to 
indicate  how  unjust  and  cruel  it  is  to  weaken,  by  these  refuted  cries  of 
ruin  and  bankruptcy,  the  faith  of  the  people  in  the  Government,  which 
now,  in  its  day  of  peril,  so  preeminently  rests  upon  the  faith  of  her 
children. 

Sir,  all  these  obligations  of  this  Government  go  out  to  the  people  borne 
up  by  all  the  faith  and  all  the  property  of  the  people ;  and  they  have  all 
the  value  which  that  faith  untarnished,  and  that  property  unestimable. 
can  give  them.  It  is  not  because  they  lack  intrinsic  value  that  they  need 
the  quality  of  ;  lawful  tender,'  but  it  is  to  secure  to  the  Government  in 
their  issue  their  true  value,  and  to  retain  for  them  that  true  value  as  you 
pass  them— as  all  agree  you  must — to  your  noble  soldiery  in  the  field,  and 
to  all  classes  of  the  people  not  engaged,  as  the  most  persistent  outside  opposi 
tion  to  this  bill  is,  in  endeavoring  to  destroy  the  value  of  these,  so  that  out  of  the 
blood  of  their  sinking  country  they  may  be  enabled  to  com  the  gains  of  their 
infamy.'1'' 

MR.   HICKMAN'S  SPEECH. 
Mr.  HICKMAN,  of  Pennsylvania,  spoke  in  favor  of  the  bill : 

"  The  only  question,  Mr.  Chairman,  which  I  have  ever  had  with  refer 
ence  to  this  bill,  has  not  been  a  question  as  to  the  powers  of  Congress, 
but  as  to  the  policy  of  the  enactment.  I  would,  myself,  have  preferred 
that  this  bill  had  followed  the  tax  bill.  I  would  have  preferred  that, 
before  the  credit  of  the  Government  had  been  tried  to  that  extent,  the 
basis  of  that  credit  should  have  been  exhibited  to  the  country.  Before  I 
take  my  neighbor's  note,  I  should  require  him  to  show  me  on  what  his 
credit  rests ;  of  what  his  capital  consists.  I  have,  therefore,  had  great 
doubt  as  to  the  propriety  of  voting  for  this  bill  as  it  stands  at  this  time. 
But  being  assured  by  the  Chairman  of  the  Committee  of  Ways  and  Means 
that  the  Treasury,  and,  perhaps,  the  Administration,  regard  this  as  a 
governmental  necessity,  I  am  disposed  to  waive  the  question  of  propriety 
or  expediency,  and  to  vote  for  it  as  a  necessity,  having  no  doubt  about 
the  right.  That  clause  of  the  Constitution  which  gives  to  the  Govern 
ment  the  right  to  coin  money,  and  to  regulate  the  value  thereof,  is,  to  my 
mind,  conclusive  of  the  great  question  that  has  been  raised  in  this  House, 
'To  coin  money.'  It  does  not  indicate  of  what  the  material  shall  consist, 
which  is  to  be  regarded  as  money.  It  might  be  gold,  or  silver,  or  copper, 


89 

or  brass,  or  iron,  at  the  pleasure  of  the  Government.  In  other  words,  it 
is  not  demanded  that  the  thing  itself,  which  shall  be  coined  as  money, 
shall  have  any  intrinsic  value.  The  coining  of  money  is  merely  impress 
ing  upon  that  which  is  designated  to  be  the  circulating  medium  the  mark 
of  the  sovereign,  indicating  the  will  of  the  sovereign  that  it  shall  be 
received  in  the  exigencies  of  trade  and  commerce  at  the  stated  value. 
And  that  mark  of  the  sovereign,  indicating  the  will  of  the  sovereign,  may 
just  as  well  be  impressed  upon  paper  as  upon  gold  or  silver.  Kothing  else 
can  be  made  out  of  the  Constitution  in  this  regard. 

According  to  the  arguments  which  have  been  addressed  against  this 
bill,  the  Constitution  should  have  been  made  to  read:  'Congress,  or  the 
Government,  shall  have  power  to  coin  gold  and  silver  money  according 
to  their  intrinsic  value.'  Why,  sir,  the  Government  is  not  restricted  as 
to  the  material  out  of  which  it  may  make  money;  is  not  restricted  as  to 
the  metal  that  shall  be  adopted  as  money ;  it  has  perfect  power  to  adopt 
iron  as  well  as  any  other  metalic  basis ;  and  if  any  other  metal,  why  not 
paper?  Why  not  impress  upon  paper  the  mark  of  the  sovereign,  indi 
cating  the  will  of  the  sovereign  as  to  the  value  at  which  it  shall  be 
received,  and  make  it  a  circulating  medium,  there  being  nothing  in  the 
Constitution  to  restrict  us  in  this  necessary  exercise  of  sovereign  power, 
without  which  no  Government  can  carry  on  its'operations ;  without  which 
110  Government  could  exist  ? 

I  have  no  doubt,  whatever,  in  regard  to  the  right  of  Congress  to  pass 
this  bill,  and  I  am  therefore  willing  to  vote  for  it  upon  the  ground  that  it 
is  a  necessity  at  this  time. 

MR.     LOVE  JOY'S    SPEECH. 

Mr.  LOVE  JOY,  of  Illinois,  opposed  the  bill : 

"MR.  CHAIRMAN — I  have  endeavored  for  a  day  or  two  to  obtain  the 
floor,  for  the  purpose  of  expressing  my  views  a  little  more  at  length  than 
I  can  in  the  live  minutes  to  which  I  am  now  limited;  but,  by  an  arrange 
ment  between  the  Chair  and  the  Committee  of  Ways  and  Means,  my 
purpose  has  been  averted. 

I  will  now  simply  say  in  regard  to  the  question  of  constitutionality,  that 
there  has  not  been  a  respectable  argument  advanced  in  defense  of  the 
constitutionality  of  this  bill ;  and,  inasmuch  as  great  talent  and  eminent 
ability  have  been  brought  to  bear  upon  it,  I  take  it  that  no  respectable 
argument  can  be  made  in  vindication  of  the  constitutionality  of  this  bill. 
I  would  admit  the  plea  of  necessity,  if  I  believed  it ;  and  I  think  it  is  more 
manly  to  confess,  as  Jefferson  did,  than  it  is  to  attempt  to  torture  the 
constitution  into  the  support  of  a  measure  which  everybody  must  see  to 
be  unconstitutional. 

Now,  Mr.  Chairman,  in  regard  to  the  general  idea  of  the  bill,  it  is  a 
mere  fallacy.  The  whole  argument  used  in  favor  of  the  issue  of  these 
legal  tender  notes  is  based  upon  precisely  the  same  foundation  as  the  old 
theological  dogma,  crede  ut  edes.  et  edes — believe  that  you  eat  the  real  flesh 
of  Christ  in  the  wafer ,  and  you  do  eat  it.  Believe  that  this  piece  of  paper 
is  a  five  dollar  gold  piece,  and  it  is  a  five  dollar  gold  piece ;  believe  it  is 
worth  five  dollars,  and  it  is  worth  five  dollars. 

Xovv,  sir,  I  am  prepared  to  state  that  it  is  not  in  the  power  of  this  Con 
gress,  nor  in  the  power  of  any  legislative  body,  to  accomplish  an  impossi 
bility  in  making  something  out  of  nothing. 

The  piece  of  paper  you  stamp  as  five  dollars  is  not  five  dollars,  and  it 


90 

never  will  be  unless  it  is  convertible  into  a  five  dollar  gold  piece ;  and  to 
profess  that  it  is,  is  simply  a  delusion  and  a  fallacy.  You  may  say  even 
by  legislative  enactment  that  sixty  or  eighty  or  even  ninety-nine  cents  are 
a  hundred,  but  the  rigid,  inexorable  digits  will  stand  fixed  and  immovable 
by  your  legislative  legerdemain. 

Mr.  Chairman,  we  are  urged  by  the  Chairman  of  the  Committee  of  Ways 
and  Means  to  pass  this  bill,  because  ruin  is  before  the  Government  if  we 
do  not  pass  it.  It  reminds  me  very  forcibly  of  Cowper's  Needless  Alarm. 
I  cannot  undertake  to  give  it  in  rhyme,  but  I  will  give  the  substance  of  it. 
You  will  remember  that,  hearing  the  deep  braying  of  the  hounds,  and  the 
sound  of  the  hunter's  horn,  the  sheep  coursed  round  and  round  the  field, 
until  the  frightened  flock  came  to  the  brink  of  a  precipice,  and  to  get  away 
from  the  hounds  and  huntsman  the  pater  gregis  advised  them  thus: 

"  I  hold  it,  therefore,  wisest  and  most  fit 
That  life  to  save,  we  leap  into  the  pit." 

The  matron  of  the  flock,  more  discreet  than  the  spouse,  replies : 
"  How?  leap  into  the  pit  our  life  to  save? 
To  save  our  life,  leap  all  into  the  grave?" 

Sir,  there  is  no  precipice,  there  is  no  chasm,  there  is  no  possible  yawn 
ing,  bottomless  gulf  before  this  nation  so  terrible,  so  appalling,  so  ruinous, 
as  this  same  bill  that  is  before  us,  and  that  it  is  proposed  to  pass  under  the 
pressure  of  these  influences  brought  to  bear  upon  it. 

You  issue  $100,000,000  of  those  notes.  The  gentleman  tells  us  they  are 
already  due.  We  have  got  to  pay  the  paper  out  almost  before  we  can 
make  it.  It  has  taken  us  six  months  to  manufacture  $50,000,000,  and  we 
cannot  manufacture  it  as  fast  as  we  shall  spend  it  at  that  rate ;  so  that 
when  we  have  issued  $100,000,000  we  must  issue  another  $100,000,000,  and 
then  another  $100,000,000.  And  thus  we  plunge  from  lower  depth  to  still 
lower,  till  we  are  buried  in  an  ocean  of  inconvertible  paper.  At  every 
step  your  paper  will  depreciate  more  and  more,  until  the  expenses  of  the 
war  will  swell  to  such  an  appalling  sum  that  redemption  will  be  impos 
sible,  and  repudiation  inevitable.  Facilis  deocensus  averni,  etc..  which 
means  it  is  easy  to  slide  down  hill,  but  very  hard  work  to  draw  the  sled 
back  over  smooth  ice.  But  the  question  is  pressed :  what  will  you  do  ? 
What  do  you  propose  ?  I  propose  this : 

First— Adequate  taxation,  if  need  be,  to  the  extent  of  $200,000,000. 

Second — Adopt  legislation  that  shall  compel  all  banking  institutions  to  do 
business  on  a  specie  basis.  Every  piece  of  paper  that  claimed  to  be  money, 
but  was  not,  I  would  chase  back  to  the  man  or  corporation  that  forged  it, 
and  visit  upon  them  the  penalties  of  the  law.  1  would  not  allow  a  bank  note 
to  circulate  that  was  not  constantly,  conveniently  and  certainly  convertible  into 
specie. 

Third — I  would  issue  interest-paying  bonds  of  the  United  States,  and 
go  into  the  market  and  borrow  money  and  pay  the  obligations  of  the 
Government.  This  would  be  honest,  business-like,  and  in  the  end 
economical.  This  could  be  done.  Other  channels  of  investment  are 
blocked  up,  and  capital  would  seek  the  bonds  of  investment. 

This  is,  in  substance,  what  I  propose.  This  would  bring  us  through  the 
war  poor  indeed,  for  half  the  nation  has  to  support  the  other  half,  but 
with  the  health  and  vigor  of  the  athlete,  and  not  with  the  bloated  flesh  of 
the  beer  guzzler.  Did  I  not  know  that  the  passage  of  this  bill  was  a  fore 
gone  conclusion,  I  would  move  to  re-commit,  with  instructions  to  that 
effect." 


91  * 

SPEECH    OF    MR.     WALTON. 

Mr.  WALTON,  of  Maine,  advocated  the  bill. 

lt  Necessity  compels  us  to  pay  our  creditors  in  treasury  notes.  Our 
credit  is  exhausted ;  or  perhaps  it  will  be  more  accurate  to  say  that  the 
means  of  those  who  are  willing  to  lend  to  the  Government  have  become 
exhausted.  To  lay  and  collect  taxes  will  require  considerable  time; 
besides,  it  cannot  reasonably  be  expected  that  revenue  enough  can  ever 
be  derived  from  taxation  to  meet  all  the  expenses  of  the  Government 
while  the  war  lasts.  Practically,  therefore,  our  Government  is  reduced  to 
the  necessity  of  paying  not  only  its  other  creditors,  but  our  brave  soldiers, 
in  its  own  notes.  Thus  compelling  our  creditors  (our  brave  soldiers 
included)  to  take  their  pay  in  treasury  notes;  is  it  not  just,  is  it  anything 
more  than  common  honesty,  to  allow  them  to  pay  their  debts  in  the  same 
way.  If  these  treasury  notes  are  made  a  legal  tender,  they  will  circulate 
as  readily  as  specie  in  the  payment  of  debts,  and  will  only  cease  thus  to 
circulate,  if  ever,  when  they  have  reached  the  hands  of  those  who  have 
no  debts  to  pay.  And  if,  as  the  enemies  of  the  legal  tender  clause 
predict,  they  ever  fall  in  value  below  par,  will  not  the  loss  fall  upon  those 
who  have  money,  and  no  debts  to  pay  ?  And  can  it  fall  on  a  class  who 
will  feel  it  less?  And  as  it  is  this  class  of  persons  that  constitute  our 
money-lenders,  it  will  be  rather  a  favor  than  an  injury  to  them ;  for  these 
notes  are  convertible  into  United  States  bonds,  with  semi-annual  interest 
coupons  attached,  and  therefore  accomplishes  for  them  just  what  they 
desire— a  safe  loan  of  their  money.  I  say  a  safe  loan,  for  the  issue  of  these 
notes  is  to  be  followed  by  vigorous  taxation;  and  in  equity  the  lender 
will  have  a  lien  on  the  whole  property  of  the  United  States  as  security  for 
every  dollar  of  his  debt,  and  a  pledge  of  the  public  faith  that  this  security 
shall  be  made  available. 

The  legal  tender  clause  of  the  bill,  therefore,  while  it  secures  to  our 
soldiers  and  the  poorer  class  of  our  citizens,  who  have  debts  to  pay,  great 
advantages,  does  no  real  injury  to  capitalists,  and  ought  to  be  retained. 

The  constitutional  objections  have  not  been  overlooked.  I  think  the 
Federal  Government  has  the  same  power  to  make  these  notes  a  legal 
tender  that  it  has  to  make  anything  else  a  legal  tender.  It  can  make  noth 
ing  a  legal  tender  by  virtue  of  any  express  power.  It  has  but  an  implied  power 
in  any  case.  And  if  it  is  admitted,  as  it  always  has  been,  that  the  Govern 
ment  possesses  the  power  to  declare  what  shall  be  a  legal  tender  in  any 
case,  it  has  it  without  limitation.  It  can  make  one  thing  a  legal  tender  as 
well  as  another ;  and  whether  these  notes  shall  have  that  character  or  not, 
is  a  question  of  expediency  only,  and  not  one  of  power. 

It  is  objected  by  some  that  to  make  these  notes  a  legal  tender  will 
impair  the  obligation  of  contracts,  and  is  therefore  unconstitutional.  But 
this  is  not  true.  In  every  contract  payable  in  money,  and  no  particular 
kind  of  money  is  named,  it  is  implied,  and  is  a  part  of  the  contract,  that  it 
may  be  discharged  in  what  shall  be  the  legal  currency  at  the  time  of  pay 
ment.  A  change  or  enlargement  of  the  legal  currency  of  the  country, 
and  a  payment  in  such  new  currency,  is  no  violation  of  the  new  contract, 
but  is  in  pursuance  of  one  of  its  implied  conditions. 

Having  the  power,  and  believing,  on  the  whole,  that  the  legal  tender 
clause  is  a  beneficial  one,  I  am  in  favor  of  retaining  it  in  the  bill." 

The  question  recurred  on  Mr.  Crisfield's  amendment,  to  strike 


92 

out  the  legal  tender  clause  in  the  original  bill.  The  vote  was 
taken  in  Committee  of  the  Whole  by  tellers- 

On  taking  the  vote  the  tellers  reported— ayes  53,  noes  93,  so 
the  amendment  wasa'ejected. 

Several  other  amendments  were  made  in  Committee  of  the 
Whole,  but  inasmuch  as  they  were  all  cut  off,  modified  or  adopted 
by  subsequent  proceedings,  after  the  bill  was  reported  to  the 
House,  it  is  not  necessary  to  report  them  here.  The  bill,  as 
adopted,  is  copied  at  the  end  of  this  day's  proceedings. 

Having  gone  through  the  bill  in  Committee  of  the  Whole, 
there  was  a  good  deal  of  preliminary  skirmishing  on  the  part  of 
different  members,  who  had  proposed  substitutes  and  amendments 
as  to  the  order  of  taking  the  vote.  Some  members  feared  that 
they  would  not  be  able  to  get  a  square  vote  in  the  House  on  their 
respective  propositions.  Several  members  were  on  the  floor  at 
the  same  time.  Motions,  objections  and  counter-motions  were 
made  in  quick  succession,  and  in  various  forms,  which  continued 
for  some  time,  causing  contusion  and  preventing  any  action  of  a 
practical  character,  and  preventing  any  vote  being  taken  on  either 
proposition.  It  finally  resulted  in  an  arrangement  being  made 
that  the  bill  should  be  reported  to  the  House,  and  a  square  vote 
be  had  on  the  two  main  propositions  pending  before  the  Com 
mittee.  Mr.  Vallandigham  and  Mr.  Conkling  withdrew  their 
substitutes,  so  that  all  of  the  opponents  of  the  legal  tender  clause 
could  concentrate  on  the  substitute  agreed  to  by  Mr.  Morrill,  Mr. 
Horton,  Mr.  Corning  and  Mr.  Stratton,  one-half  of  the  Committee 
of  Ways  and  Means;  and  that  the  vote  should  be  first  taken  on 
that  substitute,  which  was  modified  to  meet  the  conflicting  views 
of  the  various  gentlemen  on  that  side,  in  order  to  make  it  as 
acceptable  as  possible  to  all  the  opponents  of  the  original  bill. 
This  substitute  finally  offered  by  Mr.  Horton,  will  be  found 
(Cong.  Gflobe,  p.  ,)  and  is  as  follows: 

The  substitute  which  was  read  was,  to  strike  out  of  the  bill  all 
after  the  word  "that,"  in  the  first  section,  and  insert  the  follow 
ing: 

"For  temporary  purposes,  the  Secretary  of  the  Treasury  be,  and  he  is 
hereby,  authorized  to  issue  on  the  credit  of  the  United  States  $100,000,000 
of  Treasury  notes,  bearing  interest  at  the  rate  of  three  and  sixty-five  huu- 
dredths  per  cent,  per  annum,  payable  in  two  years  after  date,  to  bearer,  at 
the  Treasury  of  the  United  States,  or  at  the  office  of  the  Assistant  Treas 
urer,  in  the  city  of  Xew  York,  or  at  the  office  of  the  designated  depository 
in  the  city  of  Cincinnati,  and  of  such  denominations  as  he  may  deem 


93 

expedient,  not  less  than  five  dollars  each;  and  such  notes  shall  be 
receivable  for  all  public  dues,  except  duties  on  imports,  and  for  all  sala 
ries,  debts  and  demands  owing  by  the  United  States  to  individuals,  cor 
porations  and  associations,  within  the  United  States,  at  the  option  of  such 
individuals,  corporations  and  associations ;  and  any  holder  of  said  United 
States  notes,  depositing  any  sum  not  less  than  fifty  dollars,  or  some  multi 
ple  of  fifty,  with  the  Treasurer  of  the  United  States,  or  either  of  the 
Assistant  Treasurers,  or  either  of  the  designated  depositories  at  Cincin 
nati  or  Baltimore,  shall  receive  in  exchange  therefor  duplicate  certificates 
of  deposit  for  the  amount,  with  any  accumulated  interest  thereon,  one  of 
which  may  be  transmitted  to  the  Secretary  of  the  Treasury,  who  shall 
thereupon  issue  to  the  holder  an  equal  amount  in  bonds  of  the  United 
States,  coupon  or  registered,  as  may  be  desired,  bearing  interest  at  the 
rate  of  seven  and  three-tenths  per  cent,  per  annum,  payable  semi-annually 
in  coin,  and  redeemable  at  the  pleasure  of  the  Government  after  ten  years 
from  date ;  and  such  Treasury  notes  shall  be  received  the  same  as  coin,  at 
their  par  value,  with  accumulated  interest,  in  payment  for  any  bonds 
that  may  be  hereafter  negotiated  by  the  Secretary  of  the  Treasury ;  and 
the  Secretary  of  the  Treasury  may,  from  time  to  time,  as  the  exigencies 
of  the  public  service  may  require,  issue  any  amount  of  such  Treasury 
notes  equal  to  the  amount  redeemed.  There  shall  be  printed  on  the  back 
of  the  Treasury  notes,  which  may  be  issued  under  the  provisions  of  this 
act,  the  following  words :  '  The  within  note  is  receivable  in  payment  of 
all  public  dues,  except  duties  on  imports,  and  is  exchangeable  for  bonds 
of  the  United  States,  bearing  seven  and  three-tenths  per  cent,  per  annum, 
payable  in  coin,  semi-annually. 

SEC.  2.  And  be  it  further  enacted,  That  to  enable  the  Secretary  of  the 
Treasury  to  fund  the  Treasury  notes  and  floating  debt  of  the  United  States, 
he  is  hereby  authorized  to  issue,  on  the  credit  of  the  United  States,  coupon 
bonds,  or  registered  bonds,  to  an  amount  not  exceeding  $500,000,000, — 
$200,000,000  bearing  interest  at  the  rate  of  seven  and  three-tenths  per  cent. 
per  annum,  payable  semi-annually  in  coin,  and  redeemable  at  the  pleasure 
of  the  Government,  after  ten  years  from  date,  and  $300,000,000,  redeemable 
at  the  pleasure  of  the  Government,  after  twenty-four  years  from  date,  and 
bearing  interest  at  the  rate  of  six  per  cent,  per  annum,  payable  semi- 
annually  in  coin.  And  the  bonds  herein  authorized  shall  be  of  such 
denominations,  not  less  than  fifty  dollars,  as  may  be  determined  upon  by 
the  Secretary  of  the  Treasury;  and  the  Secretary  of  the  Treasury  may 
also  exchange,  at  par,  such  bonds  at  any  time  for  lawful  money  of  the 
United  States,  or  for  any  of  the  Treasury  notes  that  have  been,  or  may 
hereafter  be,  issued  under  any  former  Act  of  Congress,  or  that  may  be 
issued  under  the  provisions  of  this  Act. 

$  3.  And  be  it  further  enacted,  That  the  Treasury  notes  and  the  coupon 
or  registered  bonds  authorized  by  this  Act,  shall  be  in  such  form  as  the 
Secretary  of  the  Treasury  may  direct,  and  shall  bear  the  written  or 
engraved  signature  of  the  Treasurer  of  the  United  States  and  the  Register 
of  the  Treasury;  and  also,  as  evidence  of  lawful  issue,  the  imprint  of 
a  copy  of  the  seal  of  the  Treasury  Department,  which  imprint  shall  be 
made  under  the  direction  of  the  Secretary,  after  the  said  notes  or  bonds 
shall  be  received  from  the  engravers,  and  before  they  are  issued;  or  the 
said  notes  and  bonds  shall  be  signed  by  the  Treasurer  of  the  United  States, 
or  for  the  Treasurer,  by  such  persons  as  may  be  specially  appointed  by 
the  Secretary  of  the  Treasury  for  that  purpose,  and  shall  be  countersigned 


94 

by  the  Register  of  the  Treasury,  or  for  the  Register,  by  such  persons 
as  the  Secretary  of  the  Treasury  may  specially  appoint  for  that  purpose ; 
and  all  the  provisions  of  the  Act  entitled,  '  An  Act  to  authorize  the  issue 
of  Treasury  notes,'  approved  the  23d  day  of  December,  1857,  so  far  as  they 
can  be  applied  to  this  act,  and  not  inconsistent  therewith,  are  hereby 
revived  and  re-enacted;  and  the  sum  of  $300,000  is  hereby  appropriated 
out  of  any  money  in  the  Treasury  not  otherwise  appropriated,  to  enable 
the  Secretary  of  the  Treasury  to  carry  this  act  into  effect. 

$  4.  And  be  it  further  enacted,  That  any  person  or  persons,  or  any  cor 
poration,  holding  Treasury  notes,  may,  at  any  time,  deposit  them,  in 
sums  of  not  less  than  $500,  with  any  of  the  Assistant  Treasurers  or  desig 
nated  depositaries  of  the  United  States,  authorized  by  the  Secretary  of  the 
Treasury  to  receive  them,  who  shall  issue  therefor,  transferable  certificates 
of  deposit,  made  in  such  form  as  the  Secretary  of  the  Treasury  shall 
prescribe,  and  said  certificates  of  deposit  shall  bear  interest  after  thirty 
days,  at  the  rate  of  five  and  two-fifths  of  one  per  cent,  per  annum ;  and 
any  Treasury  notes  so  deposited  may  be  withdrawn  from  deposit  at  any 
time,  on  the  return  of  said  certificates,  but  no  interest  shall  be  allowed 
except  after  thirty  days.  And  all  such  deposits  shall  cease  and  deter 
mine  at  the  pleasure  of  the  Secretary  of  the  Treasury,  and  after  ten  days' 
notice  shall  have  been  given  to  the  depositor. 

§  5.  And  be  it  further  enacted,  That  if  any  person  or  persons,  shall 
falsely  make,  forge,  counterfeit  or  alter,  or  cause  or  procure  to  be  falsely 
made,  forged,  counterfeited  or  altered,  or  shall  willingly  aid  or  assist  in 
falsely  making,  forging,  counterfeiting,  or  altering  any  note,  bond  or 
certificater  issued  under  the  authority  of  this  act,  or  heretofore  issued 
under  acts  to  authorize  the  issue  of  Treasury  notes  or  bonds,  or  shall  pass 
utter,  publish,  or  sell,  or  attempt  to  pass,  utter,  publish,  or  sell,  or  bring 
into  the  United  States,  from  any  foreign  place,  with  intent  to  pass,  utter, 
publish  or  sell,  as  true,  or  shall  have,  or  keep  in  possession,  or  conceal,  with 
intent  to  utter,  publish  or  sell,  as  true,  any  such  false,  forged,  counterfeited 
or  altered  note,  bond  or  certificate,  with  intent  to  defraud  anybody,  corpo 
rate  or  politic,  or  any  other  person  or  persons  whatsoever ;  every  person 
so  offending,  shall  be  deemed  guilty  of  felony,  and  shall,  on  conviction 
thereof,  be  punished  by  a  fine  not  exceeding  $5,000,  and  by  imprisonment 
and  confinement  to  hard  labor,  not  exceeding  fifteen  years." 

Upon  the  bill  being  reported  from  the  Committee  of  the  Whole 
to  the  House,  the  vote  was  first  taken  on  this  substitute. 

The  yeas  and  nays  were  ordered. 

The  question  WAS  taken,  and  it  was  decided  in  the  negative- 
yeas  55,  nays  95,  as  follows: 

Yeas — Messrs.  Ancona,  Baxter,  Biddle,  .  George  H.  Brown, 
William  G.  Brown,  Cobb,  Frederick  A.  Conkling,  Roscoe  Conk- 
ling,  Conway,  Corning,  Cox,  Cravens,  Crisfield,  Crittenden, 
Diven,  Eliot,  English,  Goodwin,  Glider,  Harding,  Holman,  Hor- 
ton,  Johnson,  Law,  Lazear,  Lovejoy,  May,  Menzies,  Justin  S. 
Morrill,  Morris,  Nixon,  Noble,  Norton,  Nugen,  Odell,  Pendleton, 
Perry,  Pomeroy,  Porter,  Edward  H.  Rollins,  Sedgwick,  Sheffield, 
Shiel,  William  G.  Steele,  Stratton,  Benjamin  F.  Thomas,  Francis 


95 

Thomas,  Train,  Vallandigham,  Wadsworth,  E.  P.  Walton,  Ward, 
Webster,  Chilton  A.  White  and  Wright— 55. 

Nays — Messrs.  Aldrich,  Alley,  Arnold,  Ashley,  Babbitt,  Gold 
smith  F.  Bailey,  Joseph  Bailey,  Baker,  Beaman,  Bingham,  Francis 
P.  Blair,  Jacob  B.  Blair,  Samuel  S.  Blair,  Blake,  Buffinton,  Burn- 
ham,  Campbell,  Chamberlain,  Clark,  Colfax,  Cutler,  Davis,  Dela 
no,  Delaplaine,  Duell,  Dunlap,  Dunn,  Edgerton,  Edwards,  Ely, 
Fenton,  Fessenden,  Fisher,  Franchott,  Frank,  Gooch,  Granger, 
Gurley,  Haight,  Hale,  Hanchett,  Harrison,  Hickman,  Hooper, 
Hutchins,  Julian,  Kelle}',  Francis  W.  Kellogg,  William  Kellogg, 
Killinger,  Knapp,  Lansing,  Leary,  Loomis,  McKean,  McKnight, 
McPherson,  Marston,  Maynard,  Mitchell,  Moorhead,  Anson  P. 
Morrill,  Olin,  Patton,  Timothy  G.  Phelps,  Pike,  Price,  Alexander 
H.  Rice,  John  H.  Rice,  Richardson,  James  S.  Rollins,  Sargent, 
Shanks,  Shellabarger,  Sherman,  Sloan,  Spaulding,  John  B.  Steele, 
Stevens,  Trimble,  Trowbridge,  Upton,  Van  Horn,  Yan  Valkcn- 
burg,  Van  Wyck,  Verree,  Wall,  Wallace,  Charles  W.  Walton, 
Whaley,  Albert  S.  White,  Wyckliffe,  Wilson,  Windom  and  Wor 
cester — 95. 

So  the  substitute  was  not  agreed  to. 

The  question  then  recurred  on  the  modification  of  the  original 
bill,  offered  by  Mr.  Stevens  as  a  substitute,  which  was  not  read, 
but  which  Mr.  Stevens  had  just  before  explained  as  follows  : 

Mr.  STEVENS — "I  wish  to  state  in  regard  to  my  amendment,  that  it  is  a 
modification  of  the  original  hill.  Those  who  are  in  favor  of  the  original 
have  agreed  upon  this  in  lieu  of  it.  We  thought  it  better  to  adopt  the 
suggestion  contained  in  the  amendment  of  the  gentleman  from  Ohio  of 
$150,000,600,  retiring  the  $50,000,000  of  demand  notes  (authorized  last 
July),  and  of  making  $150,000,000  the  maximum  to  which  they  shall  go. 
That  is  about  all  the  change  there  is,  except  that  we  have  left  out  the  foreign 
loan  clause,  which  is  in  the  original ;  and  we  have  agreed  to  adopt  an 
amendment  by  which  the  holders  of  these  notes  may  convert  them  either 
into  a  twenty  years'  bond  at  six  per  cent.,  or  five  years'  bonds  at  seven 
per  cent.,  at  their  option." 

This  modification  of  the  original  bill  had  the  concurrence  of 
the  other  half  of  the  Committee  of  Ways  and  Means — Messrs. 
Stevens,  Spaulding,  Hooper  and  Maynard,  and  was  adopted  by 
the  House  without  a  division. 

The  bill,  as  amended,  was  ordered  to  be  engrossed  and  read  a 
third  time.  The  yeas  and  naj^s  were  ordered  on  the  final  passage 
of  the  bill.  The  question  was  taken,  and  it  was  decided  in  the 
affirmative — yeas  93,  nays  59,  as  follows: 

Yeas — Messrs.  Aldrich,  Alley,  Arnold,  Ashley,  Babbitt,   Gold- 


96 

smith  F.  Bailey,  Joseph  Bailey,  Baker,  Beaman,  Bingham,  Fran 
cis  P.  Blair,  Jacob  Blair,  Samuel  S.  Blair,  Blake,  Buffinton,  Burn- 
ham,  Campbell,  Chamberlain,  Clark,  Colfax,  Cutler,  Davis,  Delano, 
Delaplaine,  Duell,  Dunn,  Edgerton,  Edwards,  Ely,  Fenton,  Fes- 
senden,  Fisher,  Franchot,  Frank,  Gooch,  Granger,  Gurley, 
Haight,  Hale,  Hanchett,  Harrison,  Hickman,  Hooper,  Hutchins, 
Julian,  Kelley,  Francis  W.  Kellogg,  William  Kellogg,  Killinger, 
Lansing,  Leary,  Loomis,  McKean,  McKnight,  McPherson,  Mars- 
ton,  Maynard,  Mitchell,  Moorhead,  Anson  P.  Morrill,  Nugen, 
Olin,  Patton,  Timothy  G.  Phelps,  Pike,  Price,  Alexander  H. 
Rice,  John  H.  Rice,  Riddle,  James  S.  Rollins,  Sargent,  Shanks, 
Shellabarger,  Sherman,  Sloan,  Spaulding,  John  B.  Steele,  Stevens, 
Trimble,  Trowbridge,  Upton,  Van  Horn,  Van  Valkenburgh,  Van 
Wyck,  Verree,  Wall,  Wallace,  Charles  W.  Walton,  Whaley, 
Albert  S.  White,  Wilson,  Windom  and  Worcester — 93. 

Nays — Messrs.  Aiicona,  Baxter,  Biddle,  George  H.  Brown, 
Cobb,  Frederick  A.  Conkling,  Roscoe  Conkling,  Conway,  Corn 
ing,  Cox,  Cravens,  Crisfield,  Diven,  Dunlap,  Eliot,  English, 
Goodwin,  Grider,  Harding,  Holman,  Horton,  Johnson,  Knapp, 
Law,  Lazear,  Lovejoy,  Mallory,  MajT,  Menzies,  Justin  S.  Morrill, 
Morris,  Nixon,  Noble,  Norton,  Odell,  Pendleton,  Perry,  Pomeroy, 
Porter,  Richardson,  Robinson,  Edward  H.  Rollins,  Sedgwick, 
Sheffield,  Shiel,  William  G.  Steele,  Stratton,  Benjamin  F.  Thomas, 
Francis  Thomas,  Train,  Vallandigham,  Voorhees,  Wadsworth,  E. 
P.  Walton,  Ward,  Webster,  Chilton  A.  White,  Wickliffe  and 
Wright— 59. 

Thus  the  legal  tender  act,  after  a  protracted  debate,  and  a  most 
determined  opposition,  by  prominent  and  influential  Republicans, ' 
as  well  as  Democrats,  was  passed  through  the  House  by  a  large 
majority. 

The  following  is  a  copy  of  the  bill  as  it  first  passed  the  House, 
on  the  6th  of  February,  1862: 

"  An  Act  to  authorize  the  issue  of  United  States  notes,  and  for  the  redemption  or 
funding  thereof,  and  for  funding  the  floating  debt  of  the  United  States. 

SECTION  1.  Be  it  enacted  by  the  Senate  and  House  of  Representatives 
of  the  United  States  of  America,  in  Congress  assembled:  That  to  meet  the 
necessities  of  the  Treasury  of  the  United  States,  and  to  provide  a  currency 
receivable  for  the  public  dues,  the  Secretary  of  the  Treasury  is  hereby 
authorized  to  issue,  on  the  credit  of  the  United  States,  $150,000.000  of 
United  States  notes,  not  bearing  interest,  payable  to  bearer  at  the 
Treasury  of  the  United  States,  at  Washington  or  jSTew  York,  and  of  such 
denominations  as  he  may  deem  expedient,  not  less  than  five  dollars  each. 
Provided,  however,  that  $50,000,000  of  said  notes  shall  be  in  lieu  of  the 


97 

demand  Treasury  notes  authorized  to  be  issued  by  the  Act  of  July  17, 
1861 ;  which  said  demand  notes  shall  be  taken  up  as  rapidly  as  practicable, 
and  the  notes  herein  provided  for  substituted  for  them :  And  provided, 
further,  that  the  amount  of  the  two  kinds  of  notes  together,  shall,  at  no 
time,  exceed  the  sum  of  $150,000,000.  And  such  notes,  herein  authorized, 
shall  be  receivable  in  payment  of  all  taxes,  duties,  imports,  excise,  debts 
and  demands  of  every  kind  due  to  the  United  States,  and  for  all  salaries, 
debts  and  demands  owing  by  the  United  States  to  individuals,  corpora 
tions  and  associations  within  the  United  States,  and  shall  also  be  lawful 
money  and  a  legal  tender,  in  payment  of  all  debts,  public  and  private, 
within  the  United  States.  And  any  holders  of  said  United  States  notes, 
depositing  any  sum  not  less  than  $50,  or  some  multiple  of  $50,  with  the 
Treasurer  of  the  United  States,  or  either  of  the  Assistant  Treasurers,  shall 
receive  in  exchange  therefor  duplicate  certificates  of  deposit,  one  of  which 
may  be  transmitted  to  the  Secretary  of  the  Treasury,  who  shall  thereupon 
issue  to  the  holder  an  equal  amount  of  bonds  of  the  United  States,  coupon 
or  registered,  as  may  by  said  holder  be  desired,  bearing  interest  at  the 
rate  of  six  per  centum  per  annum,  payable  semi-annually,  at  the  Treasury 
or  Sub-Treasury  of  the  United  States,  and  redeemable  at  the  pleasure  of 
the  United  States,  after  twenty  years  from  the  date  thereof.  Provided, 
that  the  Secretary  of  the  Treasury  shall,  upon  presentation  of  said  certifi 
cates  of  deposit,  issue  to  the  holder  thereof,  at  his  option,  and  instead  of 
the  bonds  already  described,  an  equal  amount  of  bonds  of  the  United 
States,  coupon  or  registered,  as  may  by  said  holder  be  desired,  bearing 
interest  at  the  rate  of  seven  per  cent,  per  annum,  payable  semi-annually, 
and  redeemable  at  the  pleasure  of  the  United  States,  after  five  years  from 
the  date  thereof.  And  such  United  States  notes  shall  be  received  the 
same  as  coin,  at  their  par  value,  in  payments  for  any  loans  that  may  be 
hereafter  softl  or  negotiated  by  the  Secretary  of  the  Treasury,  and  may  be 
re-issued  from  time  to  time,  as  the  exigencies  of  the  public  interests  shall 
require.  There  shall  be  printed  on  the  back  of  the  United  States  notes, 
which  may  be  issued  under  the  provisions  of  this  act,  the  following 
words :  'The  within  is  a  legal  tender  in  payment  of  all  debts,  public  and 
private,  and  is  exchangeable  for  bonds  of  the  United  States,  bearing  six 
per  centum  interest  at  twenty  years,  or  in  seven  per  cent,  bonds  at  five 
years.' 

§  2.  And  be  it  further  enacted,  That  to  enable  the  Secretary  of  the 
Treasury  to  fund  the  Treasury  notes  and  floating  debt  of  the  United 
States,  he  is  hereby  authorized  to  issue,  on  the  credit  of  the  United  States, 
coupon  bonds,  or  registered  bonds,  to  an  amount  not  exceeding  $500,000,- 
000,  and  redeemable  at  the  pleasure  of  the  Government,  after  twenty 
years  from  date,  and  bearing  interest  at  the  rate  of  six  per  centum  per 
annum,  payable  semi-annually ;  and  the  bonds  herein  authorized  shall  be 
of  such  denominations,  not  less  than  fifty  dollars,  as  may  be  determined 
upon  by  the  Secretary  of  the  Treasury ;  and  the  Secretary  of  the  Treasury 
may  dispose  of  such  bonds  at  any  time  for  lawful  money  of  the  United 
States,  or  for  any  of  the  Treasury  notes  that  have  been,  or  may  hereafter 
be,  issued  under  any  former  act  of  Congress,  or  for  United  States  notes 
that  may  be  issued  under  the  provisions  of  this  act ;  and  all  stocks,  bonds, 
and  other  securities  of  the  United  States,  held  by  individuals,  corpora 
tions,  or  associations,  within  the  United  States,  shall  be  exempt  from 
taxation  by  any  State  or  county. 

§  3.     And  be  it  further  enacted,  That  the  United  States  notes  and  the 


98 

coupon  or  registered  bonds,  authorized  by  this  act,  shall  be  in  such  forms 
as  the  Secretary  of  the  Treasury  may  direct,  and  shall  bear  the  written  or 
engraved  signatures  of  the  Treasurer  of  the  United  States,  and  the  Regis 
try  of  the  Treasury,  and  also  as  evidence  of  lawful  issue,  the  imprint  of  a 
copy  of  the  seal  of  the  Treasury  Department,  which  imprint  shall  be 
made  under  the  direction  of  the  Secretary,  after  the  said  notes  or  bonds 
shall  be  received  from  the  engravers,  arid  before  they  are  issued ;  or  the 
said  notes  and  bonds  shall  be  signed  by  the  Treasurer  of  the  United 
States,  or  for  the  Treasurer  by  such  persons  as  may  be  especially  appointed 
by  the  Secretary  of  the  Treasury  for  that  purpose,  and  shall  be  counter 
signed  by  the  Register  of  the  Treasury,  or  for  the  Register  by  such  persons 
as  the  Secretary  of  the  Treasury  may  especially  appoint  for  that  purpose ; 
and  all  the  provisions  of  the  act  entitled  "An  act  to  authorize  the  issue  of 
Treasury  notes,"  approved  the  23d  day  of  December,  1857,  so  far  as  they 
can  be  applied  to  this  act,  and  not  inconsistent  therewith,  are  hereby 
revived  and  re-enacted ;  and  the  sum  of  $300,000  is  hereby  appropriated, 
out  of  any  money  in  the  Treasury  not  otherwise  appropriated,  to  enable 
the  Secretary  of  the  Treasury  to  carry  this  act  into  effect." 

Two  penal  sections  (§  4  and  §  5)  were  adopted  as  part  of  this 
bill,  to  guard  against  counterfeiting,  but  it  is  not  important  to 
insert  them  here,  as  they  do  not  affect  the  principles  of  the  bill. 

LETTER     FROM     GEORGE     DAWSON,     ESQ.,     TO     THE     ALBANY     EVENING 

JOURNAL. 

"  WASHINGTON,  February  6,  1862. 

"This  has  been  an  exciting  day  in  the  House.  A  fierce  battle  has  been 
waged  against  the  'legal  tender'  Treasury  notes.  But,  as^I  think,  the 
right  has  prevailed,  and  by  a  vote  of  95  to  59 — a  much  stronger  force  than 
was  counted  upon,  the  real  argument  was  reduced  to  a  very  small  com 
pass.  All  admitted  the  necessity  of  a  resort  to  paper  currency ;  and  the 
question  was  whether  that  paper  should  be  made  as  nearly  par  value  as 
possible,  or  subjected  to  the  fluctuations  and  depreciations  of  an  ordinary 
irredeemable  currency.  If  made  a  legal  tender,  these  notes  could  never 
sink  below  the  best  bank  paper.  If  not  so  made,  they  would  very  soon 
cease  to  be  available  as  a  circulating  medium. 

Besides,  if  Treasury  notes  were  to  be  used  to  pay  the  Government 
creditors,  why  should  not  their  creditors  be  required  to  take  them  ?  Why 
should  the  soldier  be  required  to  take  what  the  sutler  might  refuse  ?  To 
be  sure,  the  now  legal  tender  bill  left  it  optional  with  the  soldier,  whether 
he  should  take  the  notes  or  not;  but  if  he  availed  himself  of  the  'option,' 
what  had  the  Government  to  give  him  ?  Practically,  it  wmild  be  Treasury 
notes  or  nothing,  as,  during  a  general  Bank  suspension,  it  is  irredeemable 
bank  bills  'or  no  pay.' 

It  was  not  strange  that  members  of  the  same  political  family,  differed 
on  a  question  of  really  doubtful  expediency.  And  but  for  the  necessities 
of  Government,  I  doubt  whether  the  '  legal  tender '  principle  would  have 
received  a  dozen  votes  in  the  House.  It  is  a  new  financial  principle,  and 
its  workings  may  result  in  some,  if  not  all  the  evils  predicted  from  it. 
Nevertheless,  as  Treasury  Notes  had  to  be  resorted  to,  the  common  sense 
of  the  House,  as  well  as  the  common  sense  of  the  people,  determined  that 
they  should  be  made  as  near  the  practical  value  of  gold  as  possible.  Mr. 
Spaulding,  of  Erie,  has  had  to  assume  the  laboring  oar  in  this  financial 


99 

expedient,  lie  had  but  a  bare  majority  of  bis  Committee  with  him  at  the 
outset;  and,  when  the  Secretary  of  the  Treasury  hesitated,  as  he  did  for 
several  days,  the  Committee  became  equally  divided.  And  yet,  the 
measure  carried  a  large  majority  of  the  House  with  it— a  fact  as  gratify  ing 
to  Mr.  S.  as  it  is  complimentary  to  his  financial  acumen. 

The  country  breathes  freer!  The  legal  tender  bill  has  passed  the 
House,  and  national  bankruptcy  is  averted.  The  grateful  thanks  of  all 
loyal  men  are  due  to  Mr.  Spanieling  and  the  representatives  who  supported 
the  measure,  for  this  timely  effort  in  behalf  of  the  public  credit.  The 
relief  comes  not  a  moment  too  soon.  Xow  let  the  Senate  do  its  duty 
promptly,  and  we  shall  be  clear  'of  the  breakers.'  " 

PROCEEDINGS    IN    THE    SENATE    OX    THE    BILL. 

The  le<>'al  tender  bill  was  sent  to  the  Senate  011  the  7th  hist., 

O 

and  was,  on  motion  of  Mr.  Fessenden,  read  twice  by  its  title,  and 
referred  to  the  Finance  Committee. 

The  Treasury  was  nearly  empty,  and  the  Secretary  was  unable 
to  negotiate  any  more  of  the  loan  authorized  by  the  act  passed  at 
the  extra  session  in  July,  at  the  rates  fixed  by  the  law.  The  act 
limited  him  to  par  in  disposing  of  any  of  the  bonds  or  notes 
authorized  by  that  act,  The  six  per  cent,  twenty  year  bonds 
were  then  selling  at  about  88,  and  the  7  3-10  notes  were  below 
par.  In  this  emergency,  Secretary  Chase  sent  to  Mr.  Fessenden 
a  letter,  urging  the  immediate  passage  of  a  bill  giving  temporary 
relief,  while  the  legal  tender  bill  was  being  perfected  in  the 
Senate.  Mr.  Fessenden  obtained  unanimous  consent  to  consider 
the  subject  forthwith.  The  following  proceedings  were  had: 

Mr.  FESSENDEN — "I  have  just  received  a  letter  from  the  Treasury 
Department,  which  I  will  read : 

"TREASURY  DEPARTMENT,  Feb.  7,  1862. 

"Sir:  The  condition  of  the  Treasury  requires  immediate  legislative 
provision.  What  you  said  this  morning  leads  me  to  think  that  the  bill 
which  passed  the  House  yesterday,  will  hardly  be  acted  upon  by  the 
Senate  this  week.  Until  that  bill  shall  receive  the  final  action  of  Con 
gress,  it  seems  advisable  to  extend  the  provisions  of  the  former  acts,  so  as 
to  allow  the  issue  of  at  least  $10,000,000  in  United  States  notes,  in  addition 
to  the  §30,000,000  heretofore  authorized.  I  transmit  a  bill  framed  with  that 
object,  which  will,  I  trust,  meet  your  approval  and  that  of  Congress. 
Immediate  action  on  it  is  exceedingly  desirable. 

Yours,  truly,  S.  P.  CHASE.1' 

"IIou.  WILLIAM  P.  FESSENDEN, 

Chairman  Committee  Finance,  Senate." 

The  bill  is  a  very  short  one,  and  I  will  read  it: 
/'''A  Sill  to  authorize  an  additional  issue  of  United  States  Notes. 

EC,  it  enacted,  etc.,  That  the  Secretary  of  the  Treasury,  in  addition  to  the 
$50,000,000  of  notes,  payable  on  demand,  of  denominations  not  less  than 
five  dollars,  heretofore  authorized  by  the  acts  of  July  17,  and  August  5, 


100 

1861,  be,  and  he  is  hereby,  authorized  to  issue  like  notes,  and  for  like 
purposes,  to  the  amount  of  $10,000,000,  which  said  notes  shall  be  deemed 
part  of  the  loan  of  $250,000,000  authorized  by  said  acts." 

41 1  will  state  that  this  has  just  been  received  by  me.  It  has  not  been 
submitted  to  the  Finance  Committee,  but  the  emergency  is  known  to  all. 
The  bill  is  simple  and  easily  understood,  and  I  presume  there  will  be  no 
objection  to  passing'  it  now.  At  all  events,  I  ask  the  unanimous  consent 
of  the  Senate  to  enable  me  to  introduce  the  bill  without  notice,  and  to 
have  it  considered  now." 

By  unanimous  consent,  leave  was  granted  to  introduce  the  bill, 
(S.  No.  190,)  to  authorize  an  additional  issue  of  United  States 
notes;  and  it  was  read  three  times  and  passed.  This  bill  was 
sent  to  the  House  011  the  10th  inst. ,  and  on  being  read  was  imme 
diately  passed,  without  opposition. 

On  the  10th  inst.  Mr.  Fessenden  reported  the  bill  (House  Bill 
No.  240)  from  the  Finance  Committee,  with  amendments.  The 
important  amendments  thus  reported  were : 

First — That  the  legal  tender  notes  should  be  receivable  for  all  claims 
"and  demands  against  the  United  States  of  every  kind  whatsoever,  "except 
for  interest  on  bonds  and  notes,  which  shall  be  paid  in  coin." 

Second — That  the  Secretary  might  dispose  of  United  States  bonds  ''  at 
the  market  value  thereof,  for  coin  or  Treasury  notes." 

Third — A  new  section,  No.  4,  authorizing  deposits  in  the  sub-Treasuries 
at  five  per  cent.,  for  not  less  than  thirty  days,  to  the  amount  of  $25,000,- 
000,  for  which  certificates  of  deposit  might  be  issued. 

Fourth — An  additional  section,  No.  5,  "that  all  duties  on  imported 
goods  and  proceeds  of  the  sale  of  public  lands,"  etc.,  should  be  set  apart 
to  pay  coin  interest  on  the  debt  of  the  United  States ;  and  one  per  cent, 
for  a  sinking  fund,  etc. 

On  the  12th  inst'.  Mr.  Fessenden,  Chairman  of  the  Finance 
Committee,  opened  the  debate  on  the  bill  in  a  lengthy  speech. 
(Cong.  Globe,  p.  762.) 

SPEECH    OF    MR.     FESSENDEN. 

"I  propose,  Mr.  President,  before  any  question  is  taken  on  any  one  of 
the  amendments,  to  make  some  remarks  upon  this  bill.  They  may  be 
very  dull  and  dry,  for  it  is  rather  a  dry  subject,  but  still  it  becomes  my 
duty,  as  the  organ  of  the  Committee  on  Finance,  to  explain  the  provisions 
of  this  bill. 

The  honorable  Secretary  of  the  Treasury,  at  the  beginning  of  the  ses 
sion,  recommended  two  measures — taxation  and  a  bank.  Both  of  these 
subjects  require,  at  this  stage  of  the  country,  and  under  existing  circum 
stances,  peculiar  and  long  consideration.  The  opinion  of  the  country  has 
tended  towards  what  is  called  indirect  taxation,  taxation  upon  different 
American  and  other  products,  and  different  kinds  of  property.  Sir,  that 
requires  great  time.  I  have  examined  it  sufficiently  to  be  aware  that  it 
is  not  the  labors  of  a  day,  or  a  week,  or  a  month.  It  is  substantially  new 
in  this  country,  and  it  requires  much  time,  much  study,  and  much  inform- 


101 

ation  to  acquire  all  the  knowledge  of  the  various  products  which  would 
be  likely  to  produce  a  revenue,  and  upon  which  a  tax  might,  with  pro 
priety,  be  laid.  So,  too,  with  reference  to  the  scheme  suggested  by  the 
honorable  Secretary  of  the  Treasury  with  regard  to  a  bank.  And  yet, 
notwithstanding  all  that,  a  bill  of  that  description  has  been  reported. 
With  regard  to  the  particular  bill  now  before  the  Senate,  we  all  know 
that  it  was  resorted  to  as  a  temporary  measure,  not  in  the  beginning,  but 
in  consequence  of  the  necessities  of  the  Treasury,  arising  from  a  greater 
expenditure  than  the  Secretary  could  have  imagined,  and  arising  from  the 
nesessary  delay  with  reference  to  other  measures.  Can  it  be  said  that  a 
measure  like  the  one  now  pending  before  the  Senate  and  the  country  is  a 
measure  of  a  day  or  an  hour?  Why,  sir,  what  does  it  propose?  It  pro 
poses  something  utterly  unknown  in  this  Government  from  its  foundation ; 
a  resort  to  a  measure  of  doubtful  constitutionality,  to  say  the  least  of  it, 
which  has  always  been  denounced  as  ruinous  to  the  credit  of  any  Govern 
ment  which  has  recourse  to  it ;  a  measure,  too,  about  which  opinions  in 
the  community  are  divided  as  perhaps  they  never  have  been  divided  upon 
any  other  subject;  a  measure  which,  wThen  it  has  been  tried  by  other 
countries,  as  it  often  has  been,  has  always  proved  a  disastrous  failure. 
Sir,  it  would  hardly  be  expected  that  a  measure  of  this  description, 
brought  into  the  House  of  Representatives  and  the  Senate  for  the  first 
time  in  the  history  of  the  country,  involving  questions  of  such  infinite 
importance,  not  only  with  reference  to  to-day,  but  with  reference  to  the 
future,  to  all  time,  because  it  is  setting  a  precedent  which  may  be  fol 
lowed,  should  be  taken  up  and  passed  at  once,  as  we  pass  appropriation 
bills.  It  needed  long,  careful  and  vigorous  discussion.  It  has  had  it  in  the 
other  branch  of  Congress.  I  have  read  that  discussion  from  beginning  to 
end.  It  has  been  able  and  clear  upon  both  sides  of  the  question.  The  subject 
deserved  that  discussion ;  and  the  House  of  Representatives  wrould  have 
been  faulty  if  it  had  suffered  a  measure  of  this  kind  to  be  passed  without 
its  having  undergone  a  discussion  which  should  not  only  enlighten  the 
House,  but  enlighten  the  country  upon  all  the  aspects  of  it.  Shall  Con 
gress  be  considered  in  fault  because  they  have  not  before  acted,  or  did  not 
act  heartily,  upon  a  measure  of  that  description  ?  I  think  not,  sir.  The 
time  has  been  well  spent,  and  although  I  regret  as  much  as  any  man  can 
regret  that  we  have  not  been  able  to  act  more  promptly,  I  see  no  fault  to 
be  imputed  anywhere ;  not  in  the  other  House  of  Congress,  and  certainly 
not  in  this;  for  it  has  reached  this  body  as  soon  as  it  could  possibly  reach 
it,  when  you  consider  the  nature  of  the  questions  that  were  to  be  discussed 
by  the  Committee  to  whom  it  was  referred. 

I  have  already  said  that  we  have  never  attempted  to  resort  to  such  a 
measure  before.  We  have  had  a  wrar  with  England  since  our  Government 
was  formed ;  and  if  I  am  rightly  informed,  at  that  day,  the  stocks  of  the 
Government  went  down  to  sixty  per  cent,  and  pay  was  taken  for  them  in 
such  currency  as  could  be  received,  itself  depreciated ;  and  yet  it  did  not 
occur  as  a  serious  question  to  the  men  of  that  day  to  put  forth,  under  the 
Constitution,  irredeemable  paper  made  a  legal  tender  for  the  payment  of 
debts.  To  be  sure,  the  country  then  was  poor;  it  is  now  rich,  compara 
tively.  The  country  had  not  then  the  resources  that  we  have ;  and 
perhaps  it  would  have  had  the  more  excuse  for  adopting  such  a  course.  I 
do  not  urge  this  as  an  argument  against  it  at  the  present  time,  but  only  as 
showing  the  nature  of  the  measure  itself,  to  which  it  is  now  proposed 
to  have  recourse,  in  order  to  place  the  Government  in  a  better  position; 


102 

especially,  sir,  when  you  observe  that  everybody  who  has  spoken  on  this 
question,  I  believe  without  an  exception — there  may  have  been  one  or 
two — but  all  the  opinions  that  I  have  heard  expressed,  agree  in  this :  that 
only  with  extreme  reluctance,  only  with  fear  and  trembling  as  to  the 
consequences,  can  we  have  recourse  to  a  measure  like  this,  of  making  our 
paper  a  legal  tender  in  the  payment  of  debts. 

The  Committee  on  Finance  have  reported  several  very  important 
amendments.  The  first  amendment,  which  the  Senate  will  notice  is  made 
in  the  first  section,  is  that  the  interest  on  the  public  debt  shall  be  paid  in 
coin.  The  Senate  will  observe  that  without  this,  under  the  provisions  of 
the  House  bill,  a  creditor  of  the  Government,  holding  Government  paper, 
notes,  or  bonds,  would  be  compelled  to  take  his  interest  in  notes  or  bonds, 
as  the  case  might  be,  when  the  time  for  the  payment  of  the  interest  came 
round.  He  would  have  no  choice.  The  tender  of  a  note  for  the  interest 
that  might  be  due  on  his  bonds,  however  large  or  small,  would  be  equiva 
lent  in  its  effect  to  the  tender  of  coin.  According  to  our  amendment,  the 
Government  will  be  obliged  to  provide  itself  with  coin  for  the  payment  of 
the  interest.  The  object  of  this  provision  is  not  only  to  do  justice  in  this 
regard,  but  also  to  make  it  raise  and  support  the  credit  of  the  Government 
obligations ;  and  it  will  be  perceived  how  very  important  it  is  to  that  end. 
The  Secretary,  by  the  provision  which  I  have  referred  to,  is  obliged  to 
provide  himself  with  coin  for  that  purpose,  and  he  is  obliged  to  do  it  at 
whatever  sacrifice  may  be  necessary,  in  order  to  accomplish  that  purpose. 
This  certainly  will  have  one  effect;  it  proves  the  good  faith  of  the  Govern 
ment;  that  it  means  to  do  all  it  can;  that  it  means  to  spare  no  effort 
at  whatever  cost,  to  give  to  those  who  take  the  Government  paper,  what 
they  wish  to  receive,  something  besides  Government  paper,  and  thus  run 
ning  round  in  a  circle  of  paper,  for  the  interest  upon  their  debts. 

But,  sir,  it  was  not  enough,  perhaps,  to  show  the  good  faith  of  the  Gov 
ernment  in  this  particular.  The  Committee  have  recommended  that  we 
go  further,  and  that  we  provide  a  specific  fund,  in  order  to  accomplish 
that  purpose,  and  set  it  aside  for  that  object.  It  was  proposed  in  the 
Committee — and  it  struck  me  favorably  at  first — to  set  aside,  specifically, 
the  public  duties,  by  providing  that  the  duties  on  imports  should  be  paid 
in  coin ;  but  on  consideration,  it  was  deemed  by  the  Committee  that  that 
would  be  hardly  fair.  The  result  would  be  to  make  a  distinction  between 
different  classes  of  the  community,  and  to  impose  a  very  heavy  burden 
upon  those  who  are  engaged  in  trade,  and  who  would  be  called  upon  to 
pay  duties.  If  we  provide  a  paper  currency,  the  natural  and  inevitable 
effect  of  it  is,  that  coin  increases  in  price.  The  consequence  would  be, 
unquestionably,  that  those  obliged  to  pay  duties  on  imports  might  be 
compelled  to  make  a  severe  sacrifice,  in  order  to  raise  the  coin  to  pay  the 
duties ;  and,  in  the  next  place,  the  general  effect  would  be  to,  in  effect, 
increase  the  duties  provided  by  our  tariff.  Necessarily,  if  coin  appre 
ciates,  if  it  becomes  worth  more  than  the  ordinary  currency,  and  duties 
are  to  be  paid  in  coin,  the  effect  of  such  a  provision  would  be  to  increase 
the  duties,  which  are  already  very  high,  and  in  some  cases  almost  prohib 
itory.  The  Committee,  therefore,  thought  that,  under  the  circumstances, 
that  would  not  be  wise;  although  it  will  be  perceived  that,  not  having 
done  so,  the  converse  of  the  proposition  may  be  true:  that  the  effect,  if  we 
inflate  the  currency  by  paper,  and  allow  the  duties  to  be  paid  in  paper,  is 
necessarily  to  diminish  the  duties  on  imports,  and  thus,  perhaps,  to  lead 
to  a  greater  importation. 


103 

Having1  rejected  this,  it  becomes  necessary  to  make  some  other  pro 
vision;  and  accordingly  provision  was  made,  and  will  be  found  in  the 
fifth  section,  by  setting  aside  the  amount  of  duties  received,  the  amount 
received  from  the  sales  of  the  public  lands,  and  the  amount  that  may  be 
received  from  the  confiscation  of  the  property  of  the  rebels,  to  form  a 
fund.  The  Senate  will  consider  whether  all  these  provisions  are  necessary 
and  wise,  to  create  a  fund  which  shall  be  devoted,  in  the  first  place,  to 
pay  the  interest  upon  the  coin  and  on  the  notes ;  and,  in  the  second  place, 
to  create  a  sinking  fund,  which,  in  the  end,  might  be  able  to  pay  the 
whole  debt,  and  would  in  a  certain  course  of  time. 

This,  undoubtedly,  will  be  a  very  sufficient  security ;  but,  sir,  the  Com 
mittee  have  gone  further.  In  order  that  the  Secretary  may  be  sure,  and 
that  the  public  creditors  may  feel  safe  with  reference  to  it,  they  give  to  the 
Secretary  the  power  to  sell  the  bonds  of  the  Government  at  any  time  that  it 
may  be  necessary,  at  the  market  price,  in  order  to  raise  coin.  That  can 
always  be  done.  The  sacrifice  may  be  great,  or  it  may  not;  it  depends  upon 
circumstances ;  but  at  any  rate  that  will  bring  coin.  These  two  provis 
ions,  taken  together,  have  the  effect  necessary  to  create  an  entire 
confidence  in  the  minds  of  the  purchasers  of  the  public  obligations,  that 
the  interest  will  be  surely  paid  at  the  time  it  is  due,  and  paid  in  coin ;  and 
having  done  that,  the  result  is  obvious  to  the  Committee  that  our  securities 
must  necessarily  be  placed  upon  a  more  stable  foundation,  and  be  of  ver}^ 
much  greater  value  in  the  market,  because  what  the  holder  of  public 
securities  wants,  is  to  be  sure  that  his  interest  will  be  paid,  especially  if  it 
is  on  long  time.  But,  sir,  the  power  to  sell  the  obligations  of  the  Govern 
ment  at  the  market  price  is  not  confined  to  the  interest.  The  Senate  will 
observe  that  it  is  made  general ;  that  instead  of  being  confined  and  obliged 
to  sell  the  obligations  of  the  Government  at  par,  the  Secretary  of  the 
Treasury  is  authorized  to  sell  them  at  any  time  at  the  market  price ;  and 
instead  of  being  confined  to  sell  them  for  coin,  merely  for  the  purpose  of 
raising  money  to  pay  the  interest  on  the  public  debt,  he  is  permitted  to 
sell  any  amount  at  any  time  that  it  may  be  necessary,  for  what  he  can  get. 
This  is  a  bold,  strong  measure,  and  it  may  strike  the  Senate  with  some 
surprise,  or,  at  any  rate,  it  may  lead  them  to  deliberate  upon  the  subject. 

But  the  Committee  thought,  in  giving  this  enlarged  power  to  the  Secre- 
tary  at  this  time,  that  it  was  bound — if  this  legal  tender  was  to  be  resorted 
to.  especially  if  the  bill  of  the  House  as  it  stood  should  be  adopted  by  the 
Senate,  and  should  become  a  law — that  an  assurance  should  be  given  to 
the  country  that  it  was  not  to  be  resorted  to  as  a  policy;  that  it  was  what 
it  professed  to  be,  but  a  temporary  measure.  The  opinions  of  the  Secretary 
of  the  Treasury  are  perfectly  well  known.  He  has  declared  that,  in  his 
judgment,  it  is,  and  ought  to  be,  but  a  temporary  measure,  not  to  be 
resorted  to  as  a  polic}',  but  simply  on  this  single  occasion,  because  the 
country  is  driven  to  the  necessity  of  resorting  to  it.  I  have  not  heard 
anybody  express  a  contrary  opinion,  or,  at  least,  any  man  who  has  spoken 
on  the  subject  in  Congress.  The  Chairman  of  the  Committee  of  Ways 
and  Means,  in  advocating  the  measure,  declared  that  it  was  not  contem 
plated,  and  he  did  not  believe  it  would  be  necessary  to  issue  more  than 
the  $150,000,000  of  Treasury  notes  made  a  legal  tender,  provided  by  this 
bill.  All  the  gentlemen  who  have  written  on  the  subject,  except  some 
wild  speculators  in  currency,  have  declared  that  as  a  policy  it  would  be 
ruinous  to  any  people ;  and  it  has  been  defended,  as  I  have  stated,  simply 


104: 

and  solely  upon  the  ground  that  it  is  to  be  a  single  measure,  standing  by 
itself,  and  not  to  be  repeated. 

Section  four  of  the  bill,  as  reported  by  the  Committee,  contains  a  pro 
vision  to  which  I  will  call  the  attention  of  the  Senate.  It  provides  for 
certain  deposit  certificates. 

This  provision  was  very  much  desired  by  the  banks  in  all  the  cities.  It 
was  thought  that  it  would  afford  them  facilities  that  would  give  greater 
currency  to  the  notes,  that  it  would  enable  them  to  deal  with  them  better ; 
and  therefore  we  have  offered  a  provision,  that  for  a  period  of  not  less  than 
thirty  days,  any  person  or  institution  may  deposit  their  Treasury  notes, 
in  sums  of  not  less  than  $500,  at  the  Sub-Treasury,  and  receive  an  interest 
of  five  per  cent. 

Mr.  President,  I  wish  now  to  say  something  upon  the  main  question  of 
the  bill,  which  I  have  avoided  touching,  except  incidentally ;  and  that  is 
the  clause  making  these  notes  a  legal  tender ;  for,  after  all,  that  is  the  great 
question  now  submitted  to  the  Senate.  The  Senate  will  observe  that  the 
Committee  make  no  recommendation  on  that  subject,  except  such  as  may 
be  inferred  from  the  fact  that  they  report  it  back,  retaining  the  clause,  and 
so  far  an  inference  might  be  drawn  that  the  Committee  were  in  favor 
of  it.  Under  the  circumstances  of  the  case  in  the  Committee,  (of  which, 
perhaps,  I  may  speak  with  propriety  as  the  Committee  as  a  whole,  had 
no  opinion  upon  the  subject,  their  opinions  being  so  divided.)  I  deem 
myself  at  liberty,  as  I  should,  perhaps,  be  under  any  circumstances,  if 
need  be,  and  if  my  opinions  lead  me  that  way,  to  say  what  I  have  to  say 
in  opposition  to  that  clause.  I  do  not  propose  to  do  this  except  incident 
ally.  I  propose  rather  to  state  the  argument  as  I  understand  it,  on  both 
sides,  in  relation  to  the  matter  as  briefly  as  I  can,  without  attempting  to 
go  into  the  argument  of  the  subject  myself. 

The  ground  upon  which  this  clause  making  these  notes  a  legal  tender  is 
put,  I  have  already  stated.  It  is  put  upon  the  ground  of  absolute,  over 
whelming  necessity ;  that  the  Government  has  now  arrived  at  that  point 
when  it  must  have  funds,  and  those  funds  are  not  to  be  obtained  from 
ordinary  sources,  or  from  any  of  the  expedients  to  which  we  have  hereto 
fore  had  resource,  and  therefore,  this  new,  anomalous,  and  remarkable 
provision  must  be  resorted  to  in  order  to  enable  the  Government  to  pay 
off  the  debt  that  it  now  owes,  and  afford  circulation  which  will  be  availa 
ble  for  other  purposes.  The  question  then  is,  does  the  necessity  exist? 
That  is  a  question  which  I  propose  in  some  degree  to  discuss,  because 
I  admit  fully  and  decidedly  that  the  Government,  or  the  country,  rather, 
is  to  be  sustained  in  its  present  undertaking,  and  that  we  are  bound  to 
obtain  the  means  to  effect  that  object.  If  the  necessity  exists,  I  have  no 
hesitation  upon  the  subject,  and  shall  have  none.  If  there  is  nothing  left 
for  us  to  do  but  that,  and  that  will  effect  the  object,  I  am  perfectly  willing 
to  do  that.  The  question,  however,  is  whether  it  is  necessary,  whether 
we  have  arrived  at  that  stage,  and  whether  something  can  or  cannot  be 
done  in  order  to  accomplish  the  object. 

Sir,  I  do  not  hesitate  to  say  here,  that  I  would  advocate  the  use  of  the  strong 
arm  of  the  Government  to  any  extent  in  order  to  accomplish  the  purpose  in 
ivhich  we  are  engaged.  I  would  take  the  money  of  any  citizen  against  his  will  to 
sustain  the  Government,  if  nothing  else  was  left,  and  bid  him  wait  until  the  Gov 
ernment  could  pay  him.  It  is  a  contribution  which  every  man  is  bound  to  make 
under  the  circumstances.  We  can  take  all  the  property  of  any  citizen.  That 
is  what  is  called  a  forced  contribution.  Thank  God,  we  have  not  arrived 


105 

at  that ;  but  I  am  not  certain  that  it  would  not  be  a  more  manly  course  to 
meet  the  matter  straight  in  the  face,  and  if  we  are  to  compel  a  man  to  part 
with  his  property,  to  do  it  without  offering  him  what  may  appear  to  be 
security,  and  yet  I  am  not  certain  that  that  would  not  be  the  more  manly 
and  praiseworthy  course  to  pursue.  Then,  sir,  as  to  this  question  of 
necessity,  I  wish  to  ask  the  gentlemen  to  consider  upon  what  public 
credit  is  founded?  According  to  my  reading  and  my  view  of  the  case, 
it  has  but  one  foundation,  and  that  is,  the  confidence  of  the  people  in 
the  ability  and  integrity  of  the  Government,  and  its  power  and  its  will 
to  pay.  Public  credit  has  no  other  foundation  that  I  am  aware  of  than 
that.  If  that  is  so,  then  the  question  arises,  what  is  the  ability  and  what 
is  the  integrity  of  this  Government,  and  what  is  its  will  to  pay  ?  Are  they 
such  as  of  themselves,  under  proper  legislation, will  enable  the  Government 
to  raise  means  in  the  ordinary  way?" 

Mr.  FESSENDEN  went  on  to  show  that  the  country  was  rich  in 
means,  land  fertile,  people  industrious,  agricultural  and  manufac 
tured  products  in  rgreat  abundance,  and  that  under  any  circum 
stances  we  must  be  entitled  to  credit  for  our  ability  to  pay,  and 
that  no  person  placing  himself  in  the  position  of  a  money-lender 
could  hesitate  to  say  that  we  were  entitled  to  all  the  credit  of  a 
great,  productive,  strong  and  healthful  people.  He  said  our 
credit  had  been  somewhat  injured  by  the  conduct  of  the  war,  and 
yet  he  thought  unreasonably.  He  saw  no  reason  for  loss  of  credit 
by  the  conduct  of  the  war. 

He  then  proceeded : 

"The  question,  after  all,  returns:  is  this  measure  absolutely  indispen 
sable  to  procure  means  ?  If  so,  as  I  said  before,  necessity  knows  no  law. 
What  are  the  objections  to  it?  I  will  state  them  as  briefly  as  I  can.  The 
first  is  a  negative  objection.  A  measure  of  this  kind  certainly  cannot 
increase  confidence  in  the  ability  or  the  integrity  of  the  country.  It  can 
make  us  no  better  than  we  are  to-day,  so  far  as  this  foundation  of  all 
public  credit  is  concerned. 

Next,  in  my  judgment,  it  is  a  confession  of  bankruptcy.  We  begin  and 
go  out  to  the  country  with  the  declaration  that  we  are  unable  to  pay  or 
borrow,  at  the  present  time,  and  such  a  confession  is  not  calculated  to 
increase  our  credit. 

Again,  say  what  you  will,  nobody  can  deny  that  it  is  bad  faith.  If  it 
be  necessary  for  the  salvation  of  the  Government,  all  considerations  of 
this  kind  must  yield ;  but,  to  make  the  best  of  it,  it  is  bad  faith,  and 
encourages  bad  morality,  both  in  public  and  private.  Going  to  the  extent 
that  it  does,  to  say  that  notes  thus  issued  shall  be  receivable  in  payment 
of  all  private  obligations,  however  contracted,  is  in  its  very  essence  a 
wrong,  for  it  compels  one  man  to  take  from  his  neighbor,  in  payment  of 
a  debt,  that  which  he  would  not  otherwise  receive  or  be  obliged  to  receive, 
and  what  is  rprobably  not  full  payment. 

Again,  it  encourages  bad  morals,  because,  if  the  currency  falls,  (as  it  is 
supposed  it  must,  else  why  defend  it  by  a  legal  enactment?)  what  is  the 
result  ?  It  is,  that  every  man  who  desires  to  pay  off  his  debts  at  a  dis 
count,  no  matter  what  the  circumstances  are,  is  able  to  avail  himself  of  it 


106 

against  the  will  of  his  neighbor,  who  honestly  contracted  to  receive 
something  better. 

Again,  sir,  necessarily  as  a  result,  in  my  judgment,  it  must  inflict  a  stain 
upon  the  national  honor.  We  owe  debts  abroad  yet.  Money  has  been 
loaned  to  this  country,  and  to  the  people  of  this  country,  in  good  faith. 
Stocks  of  our  private  corporations,  stocks  of  our  States  and  of  our  cities, 
are  held  and  owned  abroad.  We  declare  that  for  the  interest  on  all  this 
debt,  and  the  principal,  if  due,  these  notes,  made  a  legal  tender  by  act  of 
Congress,  at  whatever  discount  they  shall  stand,  shall  be  receivable. 
Payment  must  be  enforced,  if  at  all,  in  the  courts  of  this  country,  and 
the  courts  of  this  country  are  bound  to  recogni/e  the  law  that  we  pass. 
That  result,  then,  is  inevitable. 

Again,  sir,  it  necessarily  changes  the  values  of  all  property.  It  is  very 
well  known  that  all  over  the  world  gold  and  silver  are  recognized  as 
money,  as  currency ;  they  are  the  measures  of  value.  We  change  it  here. 
What  is  the  result  ?  Inflation,  subsequent  depression,  all  the  evils  which 
follow  from  an  inflated  currency.  They  cannot  be  avoided;  they  are 
inevitable ;  the  consequence  is  admitted.  Although  the  notes,  to  be  sure, 
pass  precisely  at  par,  gold  appreciates  and  property  appreciates. 

Again,  sir,  a  stronger  objection  than  all  that  I  have  to  this  proposition— 
I  am  stating  the  objections  which  everybody  must  entertain,  because  I 
suppose  these  facts  are  palpable — is,  that  the  loss  is  to  fall  most  heavily 
upon  the  poor,  by  reason  of  the  inflation." 

Mr.  Fcssenden  continued  his  argument  at  great  length,  urging 
taxation,  good  faith  and  economy,  as  the  best  means  of  maintain 
ing  the  credit  of  the  Government.  Said  lie  would  not  argue  the 
constitutional  question,  proposing  to  leave  his  own  mind  imin- 
structed  on  this  question,  and  if  need  be,  leave  that  question  to 
be  settled  by  the  courts.  That  this  was  a  great  crisis  truly,  but 
he  believed  we  would  be  as  well  able  to  meet  the  difficulties  with 
out  the  legal  tender  clause  as  with  it.  And  concluded  as  follows: 

"We  always  meet,  and  must  always  expect  to  meet,  in  a  Government 
like  ours  especially,  difficulties  such  as  attend  us  now— perhaps  not  so 
great,  but  greater  or  less — in  the  course  of  time.  Xo  nation  ever  escaped 
them,  and  no  nation  can  hope  to  escape  them.  I  would  not  have  perfect 
quiet  always,  in  a  republic  especially.  It  would  be  a  bad  sign  if  it  were 
so.  It  is  contrary  to  the  very  nature  of  our  Government  that  it  should 
exist.  You  never  find  quiet  except  under  a  tyranny.  Only  in  the  dead 
sea  of  despotism  is  there  a  perfect  calm.  It  cannot  be  looked  for  in  the 
wide  ocean  of  liberty.  Storms  arise  inevitably,  and  the  waves  roll  and 
dash  turbulently,  but  bright  skies  again  cheer  us,  the  agitated  waters  sub 
side,  and  their  broad  bosom  is  traversed  by  thousands  of  tall  ships  laden 
richly  with  hope  for  the  nations  of  the  world." 

.JUDGE  COLLAMER'S  SPEECH. 

Mr.  COLLA.MEII,  of  Vermont,  made  an  elaborate  speech  against 
the  legal  tender  clause  in  the  bill: 

k-He  argued  that  it  was  unconstitutional,  and  that  even  if  it  was  a 
necessity,  he  could  not  vote  for  the  measure.  To  him,  the  oath  he  had 


lor 

taken  to  support  the  Constitution,  was  recorded  in  Heaven  as  well  as 
upon  earth,  and  there  is  no  necessity  that,  in  his  estimation,  would  justify 
him  in  the  breach  of  it.  He  admitted  that  when  the  Government  borrows 
money,  it  must  give  some  evidence  of  the  debt,  whether  by  the  name 
of  Treasury  note  or  some  other  name,  is  immaterial,  but  denied  the  power 
of  Congress  to  make  them  a  tender  in  payment  of  debts.  He  quoted 
largely  from  Story  on  the  Constitution,  to  show  the  illegality  as  well 
as  inexpediency  of  this  measure.  He  said  it  would  be  aiding  and  assisting 
men  who  owed  debts,  to  pay  those  debts  with  a  depreciated  paper,  at  the 
cost  and  expense  of  the  creditor.  His  honest  opinion  was  that  the  Consti- 
tution  never  intended  to  invest  Congress  with  any  such  power.  He 
referred  to  the  debates  in  the  convention  that  formed  the  Constitution,  to 
show  that  the  men  of  that  period  always  entertained  the  opinion  that  the 
'United  States  could  have  nothing  else  a  tender  but  coin.'  While  they 
lived  there  never  was  such  a  thing  thought  of  as  attempting  to  make  the 
evidences  of  the  debt  of  the  Government  a  legal  tender,  let  their  form  bo 
what  they  might.  He  argued  that  there  was  an  express  power  '  to  bor 
row  money  on  the  credit  of  the  United  States.' 

That  where  there  is  an  express  power  to  do  a  thing,  there  can  be  no 
implied  power  to  do  the  same  thing.  There  were  two  modes  of  replenish 
ing  the  Treasury.  One  was  by  taxation,  and  the  other  to  borrow  money. 
To  borrow  money  there  must  be  a  lender  and  a  borrower,  and  both  should 
act  voluntarily,  and  not  compel  the  lender  to  part  with  his  money  without 
an  inducement.  The  operation  of  this  bill  was  not  anything  like  as  hon 
orable  or  honest  as  a  forced  loan.  Such  paper  always  depreciates,  and 
generally  fails  altogether,  and  is  never  paid." 

lie  urged  taxation,  and  the  issue  of  Treasury  notes  receivable 
for  public  dues,  and  closed  as  follows : 

"You  have  nothing  to  do  but  to  exercise  the  powers  you  possess  in  com 
manding  the  resources  that  you  can  command,  and  you  can  have  money 
and  credit  enough.  I  think  some  little  courage  becomes  us,  too,  in  per 
forming  our  duty.  I  have  no  doubt  that  this  country  is  able  to  sustain 
itself  in  this  strife,  pecuniarily  as  well  as  physically.  I,  for  one,  desire  to 
do  that;  but  I  do  not  want  to  do  it  by  saying  that  now,  because  the 
necessity  requires  money,  I  will  go  and  steal  it,  or  authorize  anybody 
else  to  steal  it.  I  will  not  say  to  a  man :  l  Here  is  my  note  for  so  much, 
and  if  I  do  not  pay  it,  you  must  steal  the  amount  from  the  first  man  you 
come  to,  and  give  him  this  note  in  payment.'  I  will  do  nothing  of  that 
kind.  I  have  faith  in  the  Government.  I  no  way  despair  of  the  success 
of  this  Government.  It  cannot  fail.  Its  power,  its  resources,  its  members 
are  such  that  it  is  not  possible  it  should  fail.  If  we  are  not  competent  to 
exercise  the  proper  moral  courage  to  do  our  duties  and  come  up  to  what 
is  wanted,  I  hope  we  shall  give  place  to  men  who  are." 

MR.    HOWE'S    SPEECH. 

Mr.  HOWE,  of  Wisconsin,  made  a  lengthy  speech  in  favor  of 
the  bill,  which  will  be  found  in  the  Appendix  to  the  Cony.  Globe, 
p.  51-2-3. 

"Mr.  PRESIDENT— Hitherto  the  effort  of  the  Government  has  been  to 
borrow  the  immense  sums  demanded  for  the  war  in  coin.  It  is  clear  to 
my  mind  that  this  effort  should  be  abandoned.  We  are  excluded  from 
borrowing  in  foreign  markets  for  the  present.  It  suits  both  the  financial 


108 

and  political  purposes  of  other  nations,  at  this  time,  to  discredit  our 
ability.  Not  until  we  have  demonstrated  that,  in  the  devotion  of  our  own 
people,  the  Government  has  resources  equal  to  its  utmost  needs,  can  we 
command  the  confidence  of  the  gold-mongers  of  Europe  ?  To  borrow  of 
those  communities,  in  their  present  temper,  would  subject  us  to  such  dis 
counts  now  as  would  neither  comport  with  our  interests  or  our  honor, 
and  would  subject  us  hereafter  to  heavy  annual  exportations  of  specie  for 
the  payment  of  interest. 

To  continue  borrowing  of  our  own  banks,  and  borrowing  coin,  is  impos 
sible.  They  have  not  the  coin  to  lend.  In  their  efforts  to  lend  to  the  Govern 
ment  they  have  already  been  forced  to  suspend  the  payment  of  specie  upon 
their  own  notes.  The  entire  sum  of  specie  in  all  the  banks  in  the  United 
States,  in  May  last,  was  only  $09,751,627;  of  that  sum  $27,125,000  was  in 
the  vaults  of  banks  within  the  seceded  States,  and  not  just  now  available 
for  the  purposes  of  this  Government.  Thus  the  specie  capital,  which  the 
banks  of  the  loyal  States  could  place  at  the  disposal  of  the  Government, 
was  but  little  more  than  seventy-two  millions  of  dollars.  That  sum  will  not 
defray  the  expenses  of  the  Government  for  fifty  days.  The  Government  may 
be  able  to  borrow  of  the  banks,  but  the  Government  cannot  borrow  specie 
of  the  banks.  If  it  borrows  anything  from  them  it  must  borrow,  not 
their  money,  but  their  promises  to  pay  money.  Nothing  is  more  certain 
than  that,  whatever  our  wishes  may  be,  it  is  impossible  to  command  the 
revenues  for  this  war  in  coin.  We  must  rely  mainly  upon  a  paper  cir 
culation;  and  there  is  another  thing  equally  certain,  which  is,  that  that 
paper,  whoever  issues  it,  must  be  irredeemable.  All  paper  currencies  have 
been,  and  ever  will  be,  irredeemable.  It  is  a  pleasant  fiction  to  call  them 
redeemable ;  it  is  an  agreeable  fancy  to  think  them  so.  I  would  not  dispel 
that  fancy,  I  would  not  expose  that  fiction,  only  that  the  great  emergency 
which  is  upon  us  seems  to  me  to  render  it  more  than  usually  proper  that 
the  nation  should  begin  to  speak  truth  to  itself;  to  have  done  with  shams, 
and  to  deal  with  realities. 

To  talk  of  borrowing  of  your  banks  the  money  to  support  your  army 
and  your  navy,  is  as  idle  as  for  England  to  talk  of  borrowing  from  her 
national  bank  the  money  to  pay  her  national  debt.  There  is  but  one  fund 
adequate  to  supply  the  national  finances,  and  that  is,  the  property  of  the 
nation.  There  is  but  one  guarantee  upon  which  the  national  credit  can 
securely  rest,  and  that  is  the  national  faith.  In  the  discharge  of  that  duty 
Congress  is  clothed  with  unrestricted  power  to  raise  and  support  armies, 
to  provide  and  maintain  navies.  Congress  is  also  clothed  with  power  '  to 
make  all  laws  which  shall  be  necessary  and  proper  for  carrying  into  exe 
cution  the  foregoing  powers,  and  all  other  powers  vested  by  this  Constitu 
tion  in  the  Government  of  the  United  States.' 

To  preserve  for  these  eleven  misguided  States  a  republican  form  of 
government,  we  have  raised  such  armies  and  provided  such  navies  as  this 
continent  never  before  saw — such  as  the  world  has  rarely  seen.  I  deem 
those  armies  and  navies  *  necessary  and  proper '  for  the  occasion.  To  sup 
port  those  armies  and  maintain  those  navies  I  deem  the  measure  before  the 
Senate  'necessary  and  proper.' 

Those  who  deny  the  constitutional  authority  to  pass  this  bill  must  deny 
its  necessity  or  its  propriety.  Those  who  deny  its  necessity  or  its  pro 
priety  ought  to  show  us  some  plan  for  avoiding  it.  some  measure  adequate 
to  the  emergency,  and  more  proper  than  the  one  proposed  by  this  bill. 


109 

Two  months  have  elapsed  since  the  policy  of  this  bill  has  been  discussed, 
and  no  one  of  its  opponents  has  yet  produced  a  substitute.  The  total 
neglect  to  offer  a  substitute  is  prima  fade  evidence  of  the  necessity  for 
this.  But  it  is  not  the  only  evidence  of  that  necessity.  It  is  evident 
that  no  substitute  can  be  provided,  except  it  be  taxation  or  direct  loans. 

I  have  already  said  that  taxation  is  inadequate  to  the  supply  demanded 
for  this  terrible  occasion.  No  nation  of  modern  times  has  been  able  to 
provide  from  taxes  alone,  the  immense  sums  we  are  called  upon  to 
expend.  I  will  presently  show  that  direct  loans  are  quite  as  impractica 
ble  as  taxation. 

The  Senator  from  Ohio  [Mr.  Sherman,]  proposes  to  amend  this  bill,  so 
as  to  authorize  the  Secretary  of  the  Treasury  to  sell  the  public  stocks  for 
whatever  he  may  be  offered  for  them;  to  go  into  the  market  with  the 
national  credit,  and  to  sell  it  for  whatever  the  crippled  capital  of  the 
country  chooses  to  offer  for  it,  to  fling  the  financial  character  of  the 
Republic,  as  a  bone,  to  be  quarreled  and  growled  over  by  the  bulls  and 
bears  of  the  stock  market.  To  that  amendment  I  am  opposed.  If  you 
notify  the  capital  of  the  country  that  you  are  prepared  to  pay  for  money, 
whatever  it  is  pleased  to  exact,  it  will  be  hoarded  to  wait  the  extremity 
of  your  distress.  No  man  likes  to  sell  for  less  than  he  buys.  No  man 
likes  to  buy  for  more  than  his  neighbors.  And  if  we  advertise  to  the 
world  that,  like  any  other  spendthrift,  we  are  prepared  to  pay  for  money 
according  to  our  necessities  for  it,  no  man  will  purchase  our  bonds  at 
ninety  cents  for  fear  we  shall  presently  sell  at  seventy-five;  and  if  we 
offer  them  at  seventy-five  per  cent.,  we  give  the  best  of  assurances  that 
we  will  soon  sell  at  fifty. 

Sir,  if  one  of  your  soldiers  shrinks  from  duty,  and  deserts  his  county's 
cause  for  fear  of  losing  his  life,  he-  is  called  a  coward,  and  he  is  ignomin- 
iously  dismissed  from  his  company,  or  shot  in  its  presence.  By  what 
fitting  term,  then,  shall  \ve  designate  him  who  deserts  his  country  in  its 
greatest  need,  for  fear  of  losing  his  money  ?  By  what  penalties  should  he 
be  visited? 

Money  and  men  alone  do  not  constitute  the  wealth  of  a  nation.  The 
genius,  the  generosity,  the  courage,  the  intellect,  and  the  patriotism  of 
the  people  are  all  national  resources.  In  an  emergency  like  this,  the 
Government  should  not  draw  upon  one  fund  alone,  but  every  fund  should 
respond  alike.  Surely  avarice  and  cowardice  should  not  alone  be  exempt 
from  the  common  burdens." 

Mr.  FESSENDEN  moved  to  amend  the  bill  so  that  the  six  per 
cent,  bonds  should  be  "redeemable  in  five  years,  and  payable  twenty 
years  from,  date.11 

MR.   CHANDLER'S  SPEECH. 

Mr.  CHANDLER,  of  Michigan,  spoke  on  the  amendment  to 
make  the  bonds  redeemable  in  Jive  years." 

Mr.  CHANDLER — "I  am  in  favor  of  the  amendment  of  the  Senator  from 
Maine,  for  the  reason  that  I  believe  we  need  not  borrow  money  at  long 
dates  at  a  high  rate  of  interest.  Still,  I  object  to  the  Senator's  hypothesis 
that  this  war  may  last  one  or  two  years.  There  lias  not  been  a  day  since 


110 

the  1st  day  of  November,  when  we  could  not  have  closed  the  war  in  sixty 
days,  with  our  forces  then  in  the  field,  and  from  this  day  forth  we  can 
close  the  war  in  sixty  days,  by  an  advance  of  our  armies;  and  I  believe 
that  the  time  has  now  arrived  when  we  will  advance  our  armies,  and 
when  the  war  will  be  brought  to  a  dose  within  sixty  days  from  this  date.  I  am 
therefore,  in  favor  of  restricting  the  bonds,  and  giving  the  Secretary  of 
the  Treasury  the  right  to  redeem  them  within  five  years,  and  I  would 
even  make  the  time  shorter  than  that,  and  say  "within  three  years." 
The  time  has  arrived  when  this  rebellion  is  within  our  grasp.  The  time 
has  arrived  when  the  order,  "forward,"  will  close  this  rebellion.  The 
obstacles  are  small.  The  objects  are  great.  We  can  remove  the  only 
obstacle  that  stands  in  our  way,  and  we  can  close  this  rebellion  before  the 
1st  day  of  May  next,  and  I  believe,  I  believe  solemnly,  that  we  shall  do  it. 
We  have  but  one  obstacle,  and  that  obstacle  is  so  small  that  we  can 
remove  it  to-morrow,  if  Congress,  if  the  Senate  say  so.  It  is  a  very  small 
obstacle,  yet  it  has  stood  in  our  way  for  four  months. 

1  hope  that  the  amendment  of  the  Senator  from  Maine  will  prevail ;  and 
I  would  prefer  to  reduce  the  time  which  he  has  fixed,  from  five  years  to 
three  years.  I  would  not  pay  seven  per  cent.,  nor  even  six  per  cent., 
more  than  three  years.  Our  five  per  cent,  bonds  will  be  worth  more  than 
par  in  three  years  from  this  date.  I  know  that  the  money  market  is  the 
touchstone  of  the  national  credit;  but  I  know,  at  the  same  time,  that  the 
United  States  five  per  cent,  would  be  worth  more  than  par  to-day,  if  the 
country  and  Congress  knew  our  present  position.  One  obstacle  stands  in 
our  way,  and  that  is  a  very  small  one. 

I  hope  the  amendment  will  prevail,  and  that  we  shall  reduce  the  time  at 
least  to  five  years.  I  should  prefer  its  reduction  to  three  years.  This  war 
is  nearly  ended.  A  single  order,  "forward,"  to-morrow,  and  we  have  the 
man  to  give  the  order  in  the  Secretary  of  War,  and  the  war  is  ended." 

The  amendment  was  agreed  to. 

On  the  13th  inst.  Mr.  Collamer  moved  to  strike  out  the  legal 
tender  clause  in  the  bill,  and  on  this  motion  Mr.  Wilson  obtained 
the  floor. 

MR.  WILSON'S  SPEECH. 

Mr.  WILSON,  of  Massachusetts,  spoke  as  follows : 

"Mr.  PRESIDENT — This  proposition  is  a  very  simple  and  plain  one,  and 
certainly  very  easy  of  comprehension ;  but,  it  seems  to  me,  the  fate  of  the 
measure  itself  is  involved  in  the  decision.  If  the  amendment  proposed 
by  the  Senator  from  Vermont  is  accepted,  I  shall  vote  against  the  whole 
bill  under  any  and  all  circumstances,  for  I  conceive  that  it  would  be 
unjust  to  issue  a  currency  of  $150,00,000  of  Government  paper,  and  impose 
it  upon  all  persons  in  the  employ  of  the  Government,  upon  our  soldiers  in 
the  field,  and  upon  those  who  have  made  contracts  to  supply  the  armies 
of  the  Republic,  and  to  do  nothing  to  protect  the  credit  of  that  currency 
when  in  their  hands,  imposed  upon  them  by  our  necessities.  I  should 
consider  such  a  measure  as  that  unjust,  wickedly  unjust;  and  I  could  not, 
and  I  would  not,  under  any  circumstances,  be  guilty  of  giving  a  vote  of 
that  character.  If  that  amendment  should  be  adopted,  I  hope  every  Sen 
ator  in  favor  of  the  legal  tender  clause  will  vote  against  the  bill  and  defeat 
it  if  possible.  I  think  we  owe  it  to  the  character  of  the  Senate,  and  the 
character  of  the  country. 


Ill 

Passing  by  the  question  of  constitutional  powers,  and  coi 
simply  as  a  practical  question,  it  is  a  contest  between  brokers,  and 
and  money-changers  on  the  one  side,  and  the  people  of  the  United 
on  the  other.  I  venture  to  express  the  opinion  that  ninety-nine  of 
hundred  of  the  loyal  people  of  the  United  States  are  for  this  legal  tender" 
clause.  I  do  not  believe  that  there  are  one  thousand  persons  in  the  State 
I  represent  who  are  not  in  favor  of  it.  The  entire  business  community, 
with  hardly  a  solitary  exception,  men  who  have  trusted  out  of  the  country 
in  commercial  transactions  their  tens  and  hundreds  of  millions,  are  for 
the  bill  with  this  legal  tender  clause.  Yes,  sir,  the  people  in  sentiment 
approach  unanimity  upon  the  question.  What  is  true  of  Massachusetts 
is,  in  my  judgment,  true  to  a  considerable  extent  of  New  England,  and 
true  to  some  extent  of  the  Central  States  and  the  West.  I  believe  that  no 
measure  that  can  be  passed  by  the  Congress  of  the  United  States,  unless 
it  be  a  bill  to  raise  revenue  to  support  the  credit  of  the  Government,  will 
be  received  with  so  much  joy  as  the  passage  of  this  bill  with  the  legal 
tender  clause.  On  that  question  I  entertain  no  shadow  of  doubt.  If  you 
pass  this  bill  with  the  legal  tender,  the  legal  tender  cannot  injuriously 
affect  the  credit  of  this  currency  you  propose  to  circulate.  Xo  harm  can 
certainly  come  of  it.  It  seems  to  me,  sir,  the  argument  made  by  the  Sen 
ator  from  Vermont,  and  the  Senator  from  Maine,  is  an  argument  against 
issuing  these  notes  as  a  currency  at  all.  The  legitimate  inferences  from 
their  arguments  are  against  this  proposition  for  $150,000,000  of  demand 
Treasury  notes.  I  have  received  several  letters  from  my  own  State  in 
fajvor  of  the  bill — persons  representing  millions,  in  favor  of  the  legal  tender 
clause.  The  intelligence  I  obtain  from  all  portions  of  the  country  is  to 
the  same  effect.  I  shall,  therefore,  vote  against  striking  out  that  clause. 
If  it  is  retained,  I  shall  vote  for  the  bill ;  if  it  is  stricken  out,  I  shall  give 
my  vote  against  putting  upon  the  people,  upon  the  soldiers  of  the  country, 
$150,000.000  of  demand  notes,  and  doing  nothing  to  protect  those  upon 
whom  we  impose  this  Government  paper."' 

MR.    SHERMAN'S  SPEECH. 

Mr.  SHERMAN,  of  Ohio,  made  an  elaborate  speech  in  favor  of 
the  bill,  and  in  opposition  to  the  motion  of  Mr.  Collamer  to 
strike  out  the  legal  tender  clause. 

"The  motion  of  the  Senator  from  Vermont  now  for  the  first  time  pre 
sents  to  the  Senate  the  only  question  upon  which  the  members  of  the 
Committee  of  Finance  had  any  material  difference  of  opinion,  and  that 
is,  whether  the  notes  provided  for  in  this  bill  shall  be  made  a  legal  tender 
in  payment  of  public  and  private  debts  ?  Upon  this  point  I  will  commence 
the  argument  Avhere  the  Senator  from  3Iaine  left  it. 

In  the  first  place,  I  will  say,  every  organ  of  financial  opinion — if  that  is 
a  correct  expression— in  this  country  agrees  that  there  is  such  a  necessity, 
in  case  we  authorize  the  issue  of  demand  notes.  You  commence  with 
the  Secretary  of  the  Treasury,  who  has  given  this  subject  the  most  ample 
consideration.  He  declares  not  only  in  his  official  communications  here, 
but  in  his  private  intercourses  with  the  members  of  the  Committee,  that 
this  clause  is  indispensably  necessary  to  the  security  and  negotiability  of 
these  demand  notes.  We  all  know  from  his  antecedents,  from  his  peculiar 
opinions,  that  he  would  be  probably  the  last  man  among  the  leading  poli 
ticians  of  our  country  to  yield  to  the  necessity  of  substituting  paper 


'  112 

money  for  coin.  He  has  examined  this  question  in  all  its  length  and 
breadth.  He  is  in  a  position  where  he  feels  the  necessity.  He  is  a  states 
man  of  admitted  ability,  and  distinguished  in  his  high  position.  He 
informs  us  that  without  this  clause,  to  attempt  to  circulate  as  money  the 
proposed  amount  of  demand  notes  of  the  United  States,  will  prove  a  fatal 
experiment. 

In  addition  to  his  opinion,  we  have  the  concurring  opinion  of  the  Cham 
ber  of  Commerce  of  the  city  of  New  York.  With  almost  entire  unanimity 
they  have  passed  a  resolution  on  the  subject,  after  full  debate  and  consid 
eration.  That  resolution  has  been  read  by  your  Secretary.  You  have 
also  the  opinion  of  the  Committee  of  Public  Safety  of  the  city  of  New 
York,  composed  of  distinguished  gentlemen,  nearly  all  of  whom  are  good 
financiers,  who  agree  fully  in  the  same  opinion.  I  may  say  the  same  in 
regard  to  the  Chambers  of  Commerce  of  the  city  of  Boston,  of  the  city  of 
Philadelphia,  and  of  almost  every  recognized  organ  of  financial  opinion  in 
this  country.  They  have  said  to  us  in  the  most  solemn  form,  that  this 
measure  was  indispensably  necessary  to  maintain  the  credit  of  the  Gov 
ernment,  and  to"  keep  these  notes  anywhere  near  par.  In  addition,  we 
have  the  deliberate  judgment  and  vote  of  the  House  of  Representatives. 
After  a  full  debate,  in  which  the  constitutionality,  expediency  and  neces 
sity  of  this  measure  were  discussed,  in  which  all  the  objections  that  have 
been  made  here,  and  many  more,  were  urged,  the  House  of  Representa 
tives,  by  a  large  vote,  declared  that  it  was  necessary  to  issue  demand 
notes,  and  that  this  clause  was  indispensable  to  their  negotiation  and 
credit." 

He  continued  his  argument  at  length : 

"A  hard  necessity  presses  the  Government.  $100,000,000  is  now  due 
the  army,  and  $250,000,000  more  up  to  July  first.  The  Banks  of  New 
York,  Boston  and  Philadelphia,  have  exhausted  their  capitals  in  making 
loans  to  the  Government.  They  have  already  tied  up  their  capital  in  your 
bonds.  Among  others,  the  cashier  of  the  Bank  of  Commerce,  (Mr.  Vail,) 
the  largest  bank  corporation  in  the  United  States,  and  one  that  has  done 
much  to  sustain  the  Government,  appeared  before  the  Finance  Committee, 
and  stated  explicitly,  that  the  Bank  of  Commerce,  as  well  as  other  banks 
of  New  York,  could  no  further  aid  the  Government,  unless  your  proposed 
currency  was  stamped  by,  and  invested  with  the  attributes  of  lawful 
money,  which  they  could  pay  to  others  as  well  as  receive  themselves. 

Bonds  cannot  be  sold  except  at  a  great  sacrifice,  because  there  is  no 
money  to  buy  them.  As  soon  as  the  banks  suspended,  gold  and  silver 
ceased  to  circulate  as  money.  You  cannot  sell  your  bonds  for  gold  and  silver, 
which  is  the  only  money  that  can  now  be  received  under  the  Sub-Treasury  l&w. 
This  currency  made  a  legal  tender  was  necessary  to  aid  in  making  further 
loans.  lie  argued  that  the  bill  was  constitutional.  The  Senator  from 
Vermont  has  read  extracts  from  the  debates  in  the  national  convention, 
and  from  Story's  Commentaries,  tending  to  show  that  Congress  cannot 
authorize  the  issue  of  bills  of  credit.  But  I  submit  to  him  that  this  ques 
tion  has  been  settled  by  the  practice  of  the  Government.  We  issued  such 
bills  during  the  war  of  1812,  during  the  war  with  Mexico,  and  at  the  recent 
session  of  Congress.  We  receive  them  now  for  our  services ;  we  pay  them 
to  our  soldiers  and  our  creditors.  These  notes  are  payable  to  bearer ;  they 
pass  from  hand  to  hand  as  currency ;  they  bear  no  interest.  If  the  argu 
ment  of  that  Senator  is  true,  then  all  these  notes  are  unauthorized.  The 
Senator  admits  that  when  we  owe  a  debt  and  cannot  pay  it,  we  can  issue 


113 

a  note.  But  where  does  he  find  the  power  tp  issue  a  note  in  the  Constitu 
tion  ?  Where  does  he  find  the  power  to  prescribe  the  terms  of  the  note, 
to  make  it  transferable,  receivable  for  public  dues  ?  He  draws  all  these 
powers  as  incidents  to  the  power  to  borrow  money.  According  to  his 
argument,  when  we  pay  a  soldier  a  ten  dollar  demand  bill,  we  borrow  ten 
dollars  from  the  soldier;  when  I  apply  to  the  Secretary  of  the  Senate  for  a 
month's  pay,  I  loan  the  United  States  $250.  This  certainly  is  not  the 
view  we  take  of  it  when  we  receive  the  money.  On  the  other  hand,  we 
recognize  the  fact  that  the  Government  cannot  pay  us  in  gold.  We 
receive  notes  as  money.  The  Government  ought  to  give,  and  has  the 
power  to  give,  to  that  money,  all  the  sanction,  authority,  value,  necessary 
and  proper,  to  enable  it  to  borrow  money.  The  power  to  fix  the  standard 
of  money,  to  regulate  the  medium  of  exchanges,  must  necessarily  go  with, 
and  be  incident  to,  the  power  to  regulate  commerce,  to  borrow  money,  to 
coin  money,  to  maintain  armies  and  navies.  All  these  high  powers  are 
expressly  prohibited  to  the  States,  and  also  the  incidental  power  to  emit 
bills  of  credit,  and  to  make  anything  but  gold  and  silver  a  legal  tender. 
But  Congress  is  expressly  invested  with  all  those  high  powers,  'and  to  remove  all 
doubt,  is  expressly  authorized  to  use  all  necessary  and  proper  means  to  carry  these 
powers  into  effect. 

If  you  strike  out  the  tender  clause  you  do  so  with  a  knowledge  that 
these  notes  will  fall  dead  upon  the  money  market  of  the  world.  When 
you  issue  demand  notes,  and  announce  to  the  world  your  purpose  not  to 
pay  any  more  gold  and  silver,  you  then  tender  to  those  who  have  fur 
nished  you  provisions  and  services  this  paper  money.  What  can  they  do  ? 
They  cannot  pay  their  debts  with  it ;  they  cannot  support  their  families 
with  it,  without  a  depreciation.  The  whole  then  depends  on  the  promise 
of  the  Government  to  pay  at  some  time  not  fixed  on  the  note.  Justice  to 
our  creditors  demands  that  it  should  be  a  legal  tender ;  it  will  then  circu 
late  all  over  this  country,  it  will  be  the  life  blood  of  the  whole  business  of 
the  country,  and  it  will  enable  capitalists  to  buy  your  bonds.  The  only 
objection  to  the  measure  is  that  too  much  may  be  issued.  He  did  not 
believe  the  issue  of  $150,000,000  would  do  any  harm.  It  is  only  a  mere 
temporary  expedient,  and  ought  not  to  be  repeated." 

He  closed  as  follows : 

UI  have  thus,  Mr.  President,  endeavored  to  reply  to  the  constitutional 
argument  of  the  Senator  from  Vermont.  Our  arguments  must  be  sub 
mitted  finally  to  the  arbitration  of  the  courts  of  the  United  States. 
When  I  feel  so  strongly  the  necessity  of  this  measure,  I  am  constrained 
to  assume  the  power,  and  refer  our  authority  to  exercise  it  to  the  courts. 
I  have  shown,  in  reply  to  the  argument  of  the  Senator  from  Maine,  that 
we  must  no  longer  hesitate  as  to  the  necessity  of  this  measure.  That 
necessity  does  exist,  and  now  presses  upon  us.  I  rest  my  vote  upon  the 
proposition  that  this  is  a  necessary  and  proper  measure  to  furnish  a  cur 
rency — a  medium  of  exchange — to  enable  the  Government  to  borrow 
money,  to  maintain  an  army  and  support  a  navy.  Believing  this,  I  find 
ample  authority  to  authorize  my  vote.  We  have  been  taught  by  recent 
fearful  experience  that  delay  and  doubt  in  this  time  of  revolutionary 
activity  are  stagnation  and  death.  I  have  sworn  to  raise  and  support 
your  armies ;  to  provide  for  and  maintain  your  navy ;  to  borrow  money ; 
to  uphold  your  Government  against  all  enemies,  at  home  and  abroad. 
That  oath  is  sacred.  As  a  member  of  this  body,  I  am  armed  with  high 


114: 

powers  for  a  holy  purpose,  and  I  am  authorized — nay,  required— tp  vote 
for  all  laws  necessary  and  proper  for  executing  these  high  powers,  and  to 
accomplish  that  purpose.  This  is  not  the  time  when  I  would  limit  these 
powrers.  Rather  than  yield  to  revolutionary  force,  I  would  use  revolu 
tionary  force.  Here  it  is  not  necessary,  for  the  framers  of  the  Constitution 
did  not  assume  to  foresee  all  the  means  that  might  be  necessary  to  main 
tain  the  delegated  powers  of  the  national  Government.  Regarding  this 
great  measure  as  a  necessary  and  proper  one,  and  within  our  power  to 
enact,  I  see  plain  before  me  the  path  of  duty,  and  one  that  is  easy  to 
tread." 

MIL   COWAN'S  SPEECH. 

Mr.  COWAN,  of  Pennsylvania,  made  a  lengthy  speech  in  favor 
of  the  amendment  to  strike  out  the  legal  tender  clause  in  the 
bill,  on  the  ground  that  Congress  had  no  power  to  make  anything 
but  gold  and  silver  a  tender  in  payment  of  private  debts. 

44 He  argued  at  length  that  Congress  had  no  power  to  'emit  bills  of 
credit,  make  anything  but  gold  and  silver  coin  a  tender  in  payment  of 
debts,  or  pass  any  law  impairing  the  obligation  of  contracts.'  They  are 
powers  which  belong  neither  to  the  United  States  nor  to  the  States,  and 
they  ought  to  belong  to  no  Government  anywhere.  He  had  supposed  that 
this  question  could  never  enter  the  American  Senate ;  that  the  day  had 
gone  by  when  it  was  open  to  discussion,  if  it  ever  was  open  since  the 
Constitution  was  formed.  Surely,  if  anything  in  the  world  is  settled — 
settled  by  the  fathers,  by  cotemporary  history,  painful  experience,  and 
the  total  absence  of  all  precedent  for  the  exercise  of  these  powers — it  is 
that  they  were  not  delegated,  nor  intended  to  be  delegated.  The  exer 
cise  of  such  a  power  would  be  subversive  of  all  our  notions  of  Govern 
ment,  and  the  ends  for  which  it  is  established,  which  are,  the  protection 
and  preservation  of  society.  The  life  and  soul  of  society  is  the  faith  man 
has  in  his  fellow-man ;  that  he  will  speak  truth,  deal  justly,  and  perform 
his  engagements  and  maintain  his  credit.  Will  it  strengthen  this  credit? 
It  proposes  that  in  all  money  contracts  notes  shall  be  taken  as  money,  the 
same  as  gold  and  silver;  all  men  who  have  money  due  them  will  be 
obliged  to  receive  these  notes  as  money  at  par ;  they  are  made  a  legal  ten 
der  on  all  debts.  The  power  claimed  for  the  Government  subverts  the 
Government  itself,  and  makes  it  destroy  that  which  it  was  intended  to 
protect  and  preserve.  It  is  abhorrent  of  reason,  justice  and  all  notions  of 
right.  He  thought  that  the  legal  tender  clause  would  not  give  the  notes 
credit,  but  would  be  injurious  to  them.  It  would  disturb  the  relations 
between  debtor  and  creditor,  and  impair  all  the  contracts  of  the  people, 
more  or  less,  all  over  the  country.'' 

He  concluded  as  follows : 

"I  am  willing  to  yield  to  the  better  judgment  of  the  administration  in 
all  matters  of  policy  or  expediency,  but  I  am  still  my  own  conscience 
keeper,  and  in  all  questions  of  power  under  the  Constitution  I  must  judge 
for  myself,  and  act  accordingly.  That  Constitution  is  the  charter  of  our 
liberties,  and  the  covenant  for  the  Union  which  we  are  all  so  anxious  to 
preserve  and  defend.  I  will  stand  upon  it  to  the  last,  despite  every  neces 
sity,  however  imperious ;  and  if  the  time  comes  when  we  must  all  go  down 
together,  I  say  let  it  come;  but  let  us  go  down  as  honest  men,  with  our 
faith  unviolated ;  and  in  that  spirit,  I  hope  the  amendment  to  the  bill  may 
prevail." 


115 

MR.   DOOLITTLE'S  SPEECH. 

Mr.  DOOLITTLE,  of  Wisconsin,  regretted  that  this  bill  must  be 
acted  upon  before  the  tax  bill  was  matured. 

"  If  we  had  a  sufficient  tax  law  to  sustain  the  credit  of  the  Government, 
he  would  vote  to  strike  out  the  legal  tender  clause.  He  was  assured  that 
this  bill  must  pass  immediately,  or  the  Government  could  not  go  on.  As 
an  original  proposition,  he  did  not  believe  in  paper  money,  but  it  had 
become  engrafted  on  our  system.  He  thought  the  framers  of  the  Consti 
tution  intended  nothing  but  hard  money,  coined  gold  and  silver.  Had 
their  intentions  been  carried  out ;  had  we  always  held  fast  to  the  Consti 
tutional  currency;  had  not  paper  money,  under  both  State  and  Federal 
authorit y,  become  the  actual  currency  of  our  people ;  had  we  to-day  no 
other  currency  but  gold  and  silver,  I  would  not  tolerate  the  idea  of  passing 
this  bill  for  a  single  moment.  But,  such  is  not  our  condition ;  we  are  in 
the  midst  of  a  gigantic  war;  we  can  not  go  back;  we  must  go  forward; 
we  must  go  through;  we  must  start  from  where  we  are,  and  not  from 
where  we  would  be ;  we  must  behold  the  real  necessities  of  our  position 
as  it  is,  and  not  as  we  would  have  it,  and  look  those  necessities  squarely 
in  the  face. 

The  truth  is,  while  in  theory  the  only  money  of  our  people  is  gold  and 
silver,  the  fact  is  otherwise.  It  is  almost  exclusively  of  paper.  Aye,  sir, 
at  this  moment  it  is  the  irredeemable  paper  of  suspended  bank  corpora 
tions.  Most  unfortunately,  paper  money  does  now  exist,  and  has  existed 
so  many  years  in  this  country,  issued  under  the  sanction  of  State  authori 
ties  in  violation,  as  I  admit,  of  the  spirit  and  intentions  of  those  who 
framed  the  Constitution,  that  a  man  must  be  blind,  indeed,  who  would 
not  now,  in  time  of  war,  in  a  measure  of  practical  legislation,  recognize 
the  stubborn  fact  that  these  banking  corporations,  created  by  the  States, 
so  long  acquiesced  in  by  this  Government,  have  become  great  and  power 
ful  institutions,  and  have  practically  displaced  the  currency  of  the 
Constitution,  by  substituting  in  its  stead  their  own  paper  money.  At  all 
times  it  is  much  the  greater  part  of  our  circulating  medium,  and  when,  in 
times  of  panic  and  disaster,  comes  suspension  of  specie  payments,  it 
becomes  our  only  currency.  Such  is  our  condition  now.  What  shall  we 
do  now?  We  must  have  deeds,  not  words;  facts,  not  theories.  We 
cannot  sell  our  bonds  abroad.  The  paper  money  issued  by  banking  cor 
porations  is  all,  or  nearly  all,  the  money  our  own  people  have.  Shall  we 
sell  our  bonds  for  the  paper  money  of  suspended  banks?  No,  sir;  no 
man  will  advocate  that. 

The  only  alternative  is  to  issue  these  Treasury  notes,  which  will  go  into 
the  circulation  of  the  country  as  a  part  of  its  currency.  If,  as  I  have  said, 
the  question  now  were  whether  we  should  begin  to  build  up  a  paper  cur 
rency  in  this  country,  or  hold  fast  to  the  currency  of  the  Constitution, 
I  would  oppose  this  measure.  But  we  cut  our  moorings  from  the  solid 
ground  long,  long  ago.  We  have  been  embarked  upon  a  sea  of  paper 
money  for  years.  We  have  suffered  periodically  financial  crashes  and 
revulsions,  tossed  upon  its  uncertain  waves,  blown  up  and  down  by  the 
breath  of  speculation.  We  are  still  at  sea,  and  in  the  beginning  of  a 
terrific  financial  storm,  and  the  question  is  whether  we  shall  seize  the 
rudder  and  direct  the  ship,  or  suffer  it  to  go  without  direction,  to  founder 
and  make  shipwreck  of  all  public  and  private  securities  and  values,  to 
become  the  prey  and  spoils  of  wreckers  along  the  shore.  The  simple 


116 

question  which  presses  upon  us  in  this  extremity  is,  whether  we  shall  rule 
this  currency,  created  by  these  corporations,  in  violation,  in  my  opinion, 
of  the  original  intention  of  the  Constitution  of  the  United  States,  or 
whether  they  shall  rule  us. 

For  their  good,  for  the  security  of  all,  as  well  as  for  its  own  safety,  this 
Government  must  assert  its  Constitutional  authority  over  the  currency  of 
the  country,  in  some  practicable  way,  and  it  seems  to  me  that  the  mode 
proposed  in  this  bill  is  the  simplest  and  most  direct  in  the  present  exigen 
cies,  as  a  temporary  measure,  until  the  great  measure  of  finance,  the  tax 
bill,  can  be  perfected  and  set  in  operation." 

MR.  SIMMONS'  SPEECH. 

Mr.  SIMMON?,  of  Rhode  Island,  opposed  the  legal  tender  clause 
in  this  bill. 

"He  did  not  see  its  necessity,  nor  the  Constitutional  power  for  passing 
it.  He  thought  the  Constitutional  objection  about  as  difficult  a  matter  to 
get  over  as  anything  could  well  be.  He  thought  that  if  the  legal  tender 
clause  w;as  stricken  out,  the  notes  would  not  be  bills  of  credit,  but  mere 
evidences  of  debt.  In  contemplation  of  the  Constitution,  the  old  fash 
ioned  bills  of  credit  were  promises  to  pay,  with  a  State  law  enforcing 
their  passage  against  the  will  of  those  who  were  to  take  them.  These 
were  the  national  bills  of  credit,  which  were  made  a  tender  by  State  laws 
under  the  old  Confederation.  He  thought  it  better  to  make  our  securities 
desirable  by  increasing  the  rate  of  interest,  as  high  even  as  eight  per  cent. 
He  intended  to  move  an  amendment  at  the  proper  time,  to  increase  the 
interest  to  eight  per  cent,  on  notes  and  bonds  payable  in  two  years." 

MR.  BAYARD'S  SPEECH. 

Mr.  BAYARD,  of  Delaware,  opposed  the  legal  tender  clause, 
because  it  is  unconstitutional,  impolitic  and  inexpedient. 

"He  concurred  in  the  argument  of  the  Senator  from  Vermont,  who  has 
moved  to  strike  out  the  legal  tender  clause  in  the  bill.  The  first  article  of 
the  Constitution,  in  its  first  section,  provides  that  'all  legislative  poweis 
herein  granted  shall  be  vested  in  a  Congress  of  the  United  States  '—not  an 
indefinite  delegation  of  all  powers  of  legislation,  as  is  the  case  in  our  State 
Constitutions,  where  the  legislative  power  of  the  community  is  vested  in 
a  Senate  and  House  of  Representatives ;  but  here  in  this  Constitution  of 
specially  delegated  powers,  '  all  legislative  powers  herein  granted  shall 
be  vested  in  a  Congress,'  and  none  other.  When  you  come  to  the  other 
clause,  which  specifies  these  powers,  you  find  but  a  solitary  provision 
which  has  any  relation  to  the  power  to  make  money.  The  power  to  bor 
row  is  a  distinct  thing ;  but  the  power  to  make  money,  is  i  to  coin  money, 
regulate  the  value  thereof,  and  of  foreign  coin,  and  fix  the  standard  of 
weights  and  measures.'  I  have  supposed  that  the  power  being  designated 
in  that  form,  and  Congress  having  a  right  to  exercise  only  the  power 
granted,  under  no  species  of  interpretation  could  you  hold  that  a  power 
to  coin  money  implied,  or  could  be  extended  to  a  power,  to  make  your 
own  paper,  your  promise  to  pay  money,  for  the  purpose  of  discharging 
debts  between  individuals,  or  as  against  yourself. 

In  my  judgment,  therefore,  apart  from  the  constitutional  objection, 
which  alone  would  be  sufficient  to  control  my  vote,  upon  the  ground  that 


117 

you  have  no  power  to  insert  this  clause  in  any  law,  I  cannot  vote  for  a  bill 
which  embodies  it.  It  is  impolitic  and  inexpedient,  as  well  as  unconsti 
tutional.  It  is  a  mere  temporary  expedient.  It  may  give  present  inflation 
and  present  relief  for  the  hour,  and  a  very  brief  hour  indeed,  but  it  will 
be  followed  by  a  weakening  of  the  resources  of  the  Government,  a  depre 
ciation  of  its  credit,  and  it  will  produce  nothing  but  disaster  and  ruin  to 
the  country." 

SPEECH    OF    MR.     WILLEY. 

Mr.  WILLEY,  of  Virginia,  spoke  as  follows : 

"I  do  not  rise,  Mr.  President,  certainly  not  at  the  present  time,  for  the 
purpose  of  making  a  speech,  but  I  wish  to  place  upon  record  the  reason 
why  I  shall  give  the  vote  which  I  feel  compelled  to  give  on  the  present 
occasion.  If  this  were  a  question  merely  of  expediency,  I  would  most 
readily  defer  my  judgment  to  that  of  other  gentlemen  better  capable  of 
forming  a  correct  estimate.  But,  sir,  consulting  my  own  opinion,  I  should 
say  that  the  legal  tender  clause  of  this  bill  will  have  the  contrary  effect 
upon  the  currency  and  credit  of  the  Treasury  notes  from  that  which  some 
gentlemen  seem  to  suppose.  I  believe  it  will  depreciate  their  credit,  and 
I  fear  it  will  depreciate  the  character  of  our  Government  and  our  country 
in  the  estimation  of  all  honest  and  well-meaning  nations  abroad.  But, 
sir,  believing,  as  I  siricerely  do,  that  this  clause  is  unconstitutional,  I  can 
not  vote  to  retain  it  in  the  bill.  I  have  felt  the  appeal  of  my  honorable 
friend  from  Ohio— the  plea  of  necessity.  Sir,  that  is  a  dangerous  plea, 
and  it  found  its  origin  in  a  dangerous  quarter.  It  is  said  that  the  plea  of 
necessity  is  the  plea  of  tyrants.  I  nevertheless  recognize  the  fact  that 
there  are  occasions  in  the  history  of  a  nation  when  the  old  maxim  salus 
popidi  suprema  lex,  may  apply ;  but  it  is  my  opinion  that  the  exigencies 
of  the  country  do  not,  at  this  time,  warrant  the  application  of  that  maxim ; 
and  I  should  be  sorry  if,  in  prosecuting  this  holy  war  to  put  down  an 
infamous  rebellion,  to  restore  and  maintain  the  Constitution,  we  are  our 
selves,  in  the  very  act  of  doing  so,  guilty  of  a  most  palpable  violation  of 
that  instrument." 

SPEECH   OF    MR.     HOWARD. 

Mr.  HOWARD,  of  Michigan,  said: 

"I  do  not  rise,  Mr.  President,  at  this  late  period  of  the  discussion,  to 
detain  the  Senate  longer  than  a  minute  or  two.  When  this  measure  was 
first  proposed,  and  after  I  had  given  it  merely  a  perusal,  I  came,  or 
thought  I  came,  to  the  same  conclusion  at  which  the  gentleman  from  Vir 
ginia  seems  to  have  arrived,  and  was  rather  disposed  to  think  that 
there  was  no  authority  in  the  Constitution  to  warrant  such  an  enactment 
as  this,  which  constitutes  the  Treasury  notes  a  legal  tender  in  the  payment 
of  private  debts.  The  thing  was  so  anomalous,  so  unusual  to  me,  that  I 
could  scarcely  entertain  the  idea,  and  I  confess  that  my  mind  struggled 
strongly  against  it.  But  after  a  little  reflection,  and  giving  the  question 
of  constitutional  power  such  examination  as  I  have  been  able  to  give  it, 
I  have  arrived  at  the  conclusion  that  Congress  has  the  constitutional 
power,  particularly  under  the  clause  authorizing  them  to  borrow  money, 
to  declare  this  species  of  paper  a  legal  tender  in  the  payment  of  debts 
between  individuals. 

It  is  undoubtedly  a  hard  necessity  to  which  we  are  driven ;  but  the 


118 

necessity  of  the  case  I  submit,  has  nothing  to  do  with  the  naked  question 
of  authority,  under  the  Constitution.  If  I  were  convinced  that  we  had  no 
authority,  under  the  Constitution,  to  enact  such  a  clause  as  this,  I  should 
not  feel  at  liberty  to  vote  in  favor  of  it,  and  should  certainly  vote  to  strike 
it  out ;  but  such  is  not  my  conviction.  I  believe  that  we  have  the  author 
ity  ;  and  still,  while  I  say  this,  I  must  say  at  the  same  time,  that  I  think 
several  gentlemen  who  are  friends  of  this  bill,  have  placed  too  high  an 
estimate  upon  this  particular  clause  in  the  bill.  I  doubt  very  much 
whether  it  will  add  greatly  to  the  currency  and  credit  of  the  paper  itself. 
They  think  it  will,  and  I  am  certainly  disposed  to  give  it  a  trial. 

We  have,  under  the  Constitution,  the  power  to  borrow  money.  This  no 
one  disputes.  If  we  have  the  power  to  borrow  money,  we  have  the  right; 
and  it  is  our  duty  to  place  in  the  hand  of  the  lender,  an  evidence  of  the 
fact  that  we  have  so  borrowed  it,  and  further,  that  we  intend  to  pay  what 
we  have  borrowed.  These  two  things  are  manifestly,  in  their  very  nature, 
inseparable ;  and  the  only  real  question,  it  seems  to  me,  which  addresses 
itself  to  the  Senate  is  this:  whether  we  have  any  power,  after  having 
issued  this  description  of  paper  to  the  public  creditors,  in  payment  of  their 
debts,  to  protect  the  credit  of  the  United  States,  expressed  upon  the  face 
of  the  paper,  while  it  is  in  the  hands  of  innocent  and  honest  holders  ?  I 
think  we  have.  I  think  this  is  one  of  the  most  obvious  means  of  extend 
ing  protection  to  the  public  credit  thus  expressed  upon  the  paper.  If  we 
have  it  not;  if  we  cannot  subject,  so  to  speak,  the  entire  property  of  the 
nation,  to  something  like  an  assistance  to  the  public  credit,  then  this 
power  to  borrow  money  at  once  ceases  to  be  a  power  of  any  value,  and  it 
is  a  mere  mockery  upon  the  face  of  the  Constitution.  If  we  cannot 
declare  that  this  paper  shall,  in  commercial  transactions,  be  of  equal 
validity  to  transactions  based  upon  gold  and  silver,  then  I  say  that  the 
power  to  borrow  money  ceases,  in  and  of  itself,  to  be  of  any  benefit  to  the 
Government  or  to  the  nation;  and  it  is  because  I  believe  that  we  have  this 
power,  thus  to  protect  the  public  credit,  expressed  and  pledged  on  the 
face  of  a  Treasury  note,  that  I  shall  vote  to  retain  this  clause  in  the  bill. 
I  think  we  have  the  constitutional  power,  and  I  am  willing  to  use  it  on 
this  occasion." 

MR.    McDOUG ALL'S    SPEECH. 

Mr.  McDotiGALL,  of  California,  advocated  the  bill  as  a  lawful 
and  proper  measure  to  be  adopted  at  this  time. 

"He  thought  this  a  just  and  reasonable  war  measure.  Necessity,  it  is 
said,  is  above  all  law ;  it  is  better  said,  'necessity  makes  its  own  laws.' 
Our  Treasury  is  now  exhausted.  Money  is  the  first  necessity  of  war- 
vigorous  successful  war.  Delay  is  not  to  be  contemplated — not  to  be  per 
mitted.  Prompt  present  action  is  a  necessity.  To  give  efficiency,  the 
legal  tender  clause  should  be  retained— the  bill  ought  not  to  be  amended 
by  striking  it  out.  He  argued  that  the  bill  was  constitutional;  that  we 
had  the  right  to  issue  these  notes  as  money,  to  be  used  as  a  currency  for 
the  country  in  the  present  exigency.  He  was  not  able  to  maintain  against 
it  any  good  constitutional  objection,  and  did  not  see  in  it  any  special 
injustice.  We  are  at  war;  this  is  a  war  measure;  we  must  take  war 
responsibilities.  This  measure  can  ruin  110  one,  destroy  no  one,  and  we 
are  advised  upon  the  highest  authority  that  it  is  needed  for  the  maintain- 
ance  of  the  Republic.  I  believe  the  law  constitutional,  just  and  necessary* 
I  hope  to  see  it  passed,  and  when  passed,  I  shall  hope  on." 


119 

MR.   SUMNER'S  SPEECH. 

Mr.  SUMNER,  of  Massachusetts,  made  a  lengthy  speech  in  favor 
of  the  constitutionality  and  expediency  of  the  legal  tender  clause, 
and  said  he  would  confine  his  remarks  to  this  feature  of  the  pres 
ent  bill. 

"In  the  present  exigency,  money  must  be  had;  and  we  are  told  that 
the  credit  of  the  Government  can  be  saved  only  by  an  act  that  seems  like 
a  forfeiture  of  credit.  Paper  promises  to  pay  are  to  be  made  a  legal  ten 
der  like  gold  and  silver,  and  this  provision  is  to  be  ingrafted  on  the  present 
bill  authorizing  the  issue  of  Treasury  notes  to  the  amount  of  $150,000,000. 
It  seemed  to  him  that  the  power  of  Congress  to  make  Treasury  notes  a 
legal  tender  was  settled  as  long  ago  as  when  it  was  settled  that  Congress 
might  authorize  the  issue  of  Treasury  notes ;  for  from  time  immemorial 
the  two  have  gone  together;  one  is  the  incident  to  the  other,  and,  unless 
expressly  severed,  they  naturally  go  together. 

It  is  true,  that  in  the  Constitution  there  are  no  words  express^  giving 
to  Congress  the  pOAver  to  make  Treasury  notes  a  legal  tender;  but  there 
are  no  words  expressly  giving  to  Congress  the  power  to  issue  Treasury 
notes.  If  we  consult  the  text  of  the  Constitution,  we  shall  find  it  as 
silent  with  regard  to  one  as  with  regard  to  the  other.  But,  on  the  other 
hand,  the  States  are  expressly  prohibited  to  '  emit  bills  of  credit,  to  make 
anything  but  gold  and  silver  coin  a  tender  in  payment  of  debts.  Treasury 
notes  are  'bills  of  credit,'  and  this  prohibition  is  imperative  on  the  States. 
But  the  inference  is  just  that  this  prohibition,  expressly  addressed  to  the 
States,  was  not  intended  to  embrace  Congress  indirectly,  as  it  obviously 
does  not  embrace  it  directly.  The  presence  of  the  prohibition,  however, 
shows  that  the  subject  was  in  the  minds  of  the  framers  of  the  Constitu 
tion.  If  they  failed  to  extend  it  still  further,  it  is  reasonable  to  conclude 
that  they  left  the  whole  subject  in  all  its  bearings  to  the  sound  discretion 
of  Congress,  under  the  ample  powers  intrusted  to  it. 

The  stress  that  is  so  constantly  put  upon  the  prohibitions  addressed  to 
the  States  will  justify  me  in  introducing  the  opinion  of  Mr.  Justice  Story 
in  his  Commentaries:  'It  is  manifest  that  all  these  prohibitory  clauses  as 
to  coining  money,  emitting  bills  of  credit,  and  tendering  anything  but 
gold  and  silver  in  payment  of  debts,  are  founded  upon  the  same  general 
considerations.  The  policy  is  to  provide  a  fixed  and  uniform  rule  throughout 
the  United  States,  by  which  commercial  and  other  dealings  of  the  citizens, 
as  well  as  the  moneyed  transactions  of  the  Government,  might  be 
adjusted.-— (2  Story's  Com.,  Sec.  1372.) 

If  this  view  be  correct,  then  no  inference  adverse  to  the  powers  of  the 
national  Government  can  be  drawn  from  these  prohibitory  clauses ;  for 
whatever  may  be  the  policy  of  the  national  Government,  it  will  be  a  fixed 
and  uniform  rule  throughout  the  United  States. 

From  the  proceedings  of  the  Federal  Convention  it  appears  that  a  propo 
sition  empowering  Congress  'to  emit  bills  of  credit'  was  negatived,  after 
discussion,  in  which  Mr.  Madison  said:  'Will  it  not  be  sufficient  to  pro 
hibit  the  making  them  a  tender?  This  will  remove  the  temptation  to 
emit  them  with  unjust  views.'  And  in  a  note  to  the  debate,  this  same 
great  authority  says  that  he  '  became  satisfied  that  the  striking  out  the 
words  would  not  disable  the  Government  from  the  use  of  public  notes,  as 
far  as  they  could  be  safe  and  proper,  and  would  only  cut  off  the  pretense 


120 

for  a  paper  currency,  and  particularly  for  making  bills  a  tender,  either  foi< 
public  or  private  debts.'  Then  it  appears  that  the  suggestion  was  made 
to  prohibit  the  making  of  bills  a  tender ;  but  this  suggestion  was  not  acted 
on,  and  no  such  prohibition  was  ever  moved.  It  is  evident  that  the  Con 
vention  was  not  prepared  for  a  measure  so  positive.  Less  still  was  it 
prepared  for  the  prohibition  to  emit  bills.  Such  is  the  record.  While  all 
words  expressly  authorizing  bills  were  struck  out,  nothing  was  introduced 
in  restraint  of  the  powers  of  Congress  on  this  subject.  Indeed,  Mr.  Madi 
son  declares  his  own  personal  belief,  that  the  striking  out  of  the  power 
'to  emit  bills  of  credit,'  would  not  disable  the  Government  from  the  issue 
of  public  notes,  so  far  as  they  could  be  safe  and  proper,  but  would  only  cut 
off  the  pretext  for  a  paper  currency.  It  would  seem  from  this  language,  in 
so  careful  a  writer,  that  he  imagined  the  whole  subject  was  left  substan 
tially  to  the  sound  discretion  of  Congress.  Indeed,  the  inference  from  his 
report  and  comment,  is  identical  writh  the  inference  from  the  text  of  the 
Constitution  itself.  (See  Madison's  Papers,  vol.  3,  p.  1343.) 

But  in  conceding  that  Congress  might  issue  '  public  notes,  as  far  as  they 
could  be  proper,'  in  other  words,  'bills  of  credit,'  the  whole  question  was 
practically  settled ;  and  the  usage  of  the  Government  has  been  in  harmony 
with  this  settlement.  Treasury  notes  were  issued  during  the  war  of  1812, 
also  during  the  war  with  Mexico,  and  constantly  since,  so  that  the  power 
to  issue  them  cannot  be  drawn  into  doubt.  If  there  was  any  doubt  origi 
nally,  an  unquestioned  practice,  sanctioned  by  successive  Congresses,  has 
completely  removed  it.  I  do  not  stop  to  consider  whether  the  power 
is  derived  primarily  from  the  power  <  to  borrow  money,'  or  the  power  'to 
regulate  commerce,'  or  from  the  unenumerated  powers.  It  is  sufficient 
that  the  power  exists.'  But  it  is  difficult  to  escape  the  conclusion,  that  if 
Congress  is  empowered  to  issue  Treasury  notes,  it  may  affix  to  these  notes 
such  character  as  shall  seem  just  and  proper,  declaring  the  conditions  of 
their  circulation  and  the  dues  for  which  they  shall  be  received.  Grant  the 
first  power  and  the  rest  must  follow.  Careful  you  will  be  in  the  exercise 
of  this  power,  but  if  you  choose  to  take  the  responsibility,  I  do  not  see 
what  check  can  be  found  in  the  Constitution. 

It  appears  that  the  phrase  'bills  of  credit,'  was  familiarly  used  for  bank 
notes  as  early  as  1G83,  in  England,  and  also  as  early  as  1714,  in  Xew  Eng 
land.  But  the  first  issue  in  America  was  in  1690,  by  the  Colony  of 
Massachusetts,  and  the  occasion,  identical  with  the  present,  was  to  pay 
soldiers  returning  unexpectedly  from  an  unsuccessful  expedition  against 
Canada. 

Mr.  Sumner  went  into  a  brief  history  of  the  issue  of  bills  of  credit — 
paper  money — in  the  States  of  Massachusetts,  Rhode  Island,  Connecticut, 
Virginia  and  North  Carolina,  which  led  to  the  passage  of  an  act  by 
the  Imperial  Parliament,  (24  George  II,  Sec.  2,  Chap.  53,)  1751,  which 
expressly  forbade  the  issue  of  any  paper  bills,  or  bills  of  credit,  except  for 
certain  specific  purposes,  or  upon  certain  specified  emergencies;  and 
declaring  that  such  paper  money  should  not  be  a  legal  tender  for  private 
debts.  Continental  paper  money  was  issued  during  the  Revolutionary 
war,  not  made  a  legal  tender  by  Congress,  although  the  States  were  rec 
ommended  to  make  them  such.  He  argued  at  great  length  the  power  of 
Congress  to  issue  Treasury  notes  and  make  them  a  legal  tender;  and  that 
it  was  purposely  left  by  the  framers  of  the  Constitution  to  the  sound  dis 
cretion  of  Congress,  in  great  emergencies,  to  decide  whether  it  was 
necessary  to  exercise  the  power  or  not." 

He  closed  as  follows : 


121 

"But,  while  recognizing  the  existence  of  the  discretion,  in 
resort,  under  the  law  of  necessity,  the  question  still  remains  if  this  n< 
sity  now  exists  ?  And  now,  as  I  close,  I  shall  not  cease  to  be  franl 
it  necessary  to  incur  all  the  unquestionable  evils  of  inconvertible  pa| 
forced  into  circulation  by  act  of  Congress — to  suffer  the  stain  upon 
national  faith — to  bear  the  stigma  of  a  seeming  repudiation — to  lose  for 
the  present  that  credit  which,  in  itself,  is  a  treasury— and  to  teach  debtors 
everywhere  that  contracts  may  be  varied  at  the  will  of  the  stronger? 
Surely,  there  is  much  in  these  inquiries  which  may  make  us  pause.  If 
our  country  were  poor  or  feeble,  without  population  and  without 
resources;  if  it  were  already  drained  by  a  long  war;  if  the  enemy  had 
succeeded  in  depriving  us  of  the  means  of  livelihood,  then  we  should  not 
even  pause.  But  our  country  is  rich  and  powerful,  with  a  numerous  pop 
ulation,  busy,  honest,  and  determined,  and  with  unparalleled  resources  of 
all  kinds,  agricultural,  mineral,  industrial  and  commercial;  it  is  yet 
undruined  by  the  war  in  which  we  are  engaged ;  nor  has  the  enemy  suc 
ceeded  in  depriving  us  of  any  of  the  means  of  livelihood.  It  is  hard- 
very  hard— to  think  that  such  a  country,  so  powerful,  so  rich,  and  so 
beloved,  should  be  compelled  to  adopt  a  policy  of  even  questionable  pro 
priety.  If  I  mention  these  things — if  I  make  these  inquiries — it  is  because 
of  the  unfeigned  solicitude  which  I  feel  with  regard  to  this  measure,  and 
not  with  the  view  of  arguing  against  the  exercise  of  a  constitutional 
power,  when,  in  the  opinion  of  the  Government,  in  which  I  place  trust, 
the  necessity  for  its  exercise  has  arrived.  Surety,  we  must  all  be  against 
paper  money— we  must  all  insist  upon  maintaining  the  integrity  of  the 
Government — and  we  must  all  set  our  faces  against  any  proposition  like  the 
present,  except  as  a  temporary  expedient,  rendered  imperative  by  the  exigency 
of  the  hour.  If  I  vote  for  this  proposition  it  will  be  only  because  I  am 
unwilling  to  refuse  to  the  Government,  especially  charged  with  this 
responsibility,  that  confidence  which  is  hardly  less  important  to  the  public 
interests  than  the  money  itself.  Others,  may  doubt  if  the  exigency  is 
sufficiently  imperative ;  but  the  Secretary  of  the  Treasury,  whose  duty  it 
is  to  understand  the  occasion,  does  not  doubt.  In  his  opinion  the  war 
requires  this  sacrifice.  Uncontrolable  passions  have  been  let  loose  to 
overturn  tranquil  conditions  of  peace.  Meanwhile  your  soldiers  in  the 
field  must  be  paid  and  fed.  Here,  then,  can  be  no  failure  or  postpone 
ment.  A  remedy  Avhich,  at  another  moment  you  would  reject,  is  now 
proposed.  Whatever  may  be  the  national  resources,  they  are  not  now 
within  reach,  except  by  summary  process.  Reluctantly,  painfully,  I  con 
sent  that  the  process  should  issue.  And  yet  I  cannot  give  such  a  vote 
without  warning  the  Government  against  the  dangers  from  such  an 
experiment.  The  medicine  of  the  Constitution  must  not  become  its  daily 
bread.  Xor  can  I  disguise  the  conviction  that  better  than  any  legal 
tender  will  be  vigorous,  earnest  efforts  for  the  suppression  of  the  rebellion, 
and  for  the  establishment  of  the  Constitution  in  its  true  principles  over 
the  territory  which  the  rebellion  has  usurped/' 

The  question  was  then  taken  by  yeas  and  nays  on  the  motion 
of  Mr.  Collamer  to  strike  out  the  legal  tender  clause  in  the  bill, 
and  resulted  as  follows : 

Yeas — Messrs.  Anthony,  Bayard,  Collamer,  Cowan,  Fessenden, 
Foot,  Foster,  Kennedy,  King,  Latham,  Nesmith,  Pearce,  Powell, 
Salisbury,  Simmons,  Thompson  and  Willey — 17. 


122 

Nays— Messrs.  Chandler,  Clark,  Davis,  Dixon,  Doolittle,  Har- 
lan,  Harris,  Henderson,  Howard,  Howe,  Lane  (of  Indiana), 
McDougall,  Morrill,  Pomeroy,  Rice,  Sherman,  Sumner,  Ten  Eyck, 
Wade,  Wilkinson,  Wilson  (of  Mass.)  and  Wilson  (of  Mo.) — 22. 

So  the  motion  to  strike  out  the  legal  tender  clause  was  not 
agreed  to. 

On  Mr.  Simmons'  motion  to  pay  eight  per  cent,  interest  on  two 
years'  notes  or  bonds,  the  amendment  was  agreed  to — ayes  20, 
noes  16. 

The  other  amendments  proposed  by  the  Finance  Committee 
were  agreed  to  substantially  as  reported  by  the  Committee. 

Mr.  DOOLITTLE  moved  to  limit  the  legal  tender  clause  to  debts 
hereafter  contracted,  but  the  amendment  was  not  adopted. 

MR.   KING'S  SPEECH. 
Mr.  KING,  of  New  York,  spoke  as  follows : 

"My  opinion  is  so  decided  against  this  measure,  which,  it  is  evident,  has 
the  favor  of  a  large  majority  of  the  Senate,  that  I  must  vote  against  it;  but 
I  deem  it  clue  to  myself  to  offer  a  substitute  for  the  first  section.  I  pro 
pose  to  strike  out  the  first  section  of  the  bill,  which  relates  to  Treasury 
notes  and  the  tender,  and  to  insert  what  I  send  to  the  chair  in  three  sec 
tions.  The  second  and  subsequent  sections  of  the  bill,  providing  for  bonds 
and  making  other  provisions,  I  do  not  propose  to  interfere  with. 

The  change  which  this  amendment  proposes,  is  to  strike  out  the  tender 
clause,  to  make  the  demand  notes,  which  are  issued  without  interest,  five 
year  notes,  bearing  an  interest  of  seven  and  three-tenths  per  cent,  per 
annum,  receivable  for  all  Government  dues,  or  exchangeable  for  long 
bonds  at  six  per  cent.,  interest  payable  semi-annually,  at  the  option  of  the 
holder,  and  providing  by  tax  a  sufficient  sum,  which  is  pledged  to  the 
redemption  of  these  notes,  and  ultimately  to  pay  them,  principal  and 
interest;  which  I  think  is  a  provision  that  ought  to  accompany  any  meas 
ure  providing  for  borrowing  money,  either  by  notes  or  bonds." 

The  amendment  was  not  agreed  to. 

MR.   PEARCE'S  SPEECH. 

Mr.  PEARCE,  of  Maryland,  opposed  the  legal  tender  clause  in 
the  bill. 

"Ours  is  a  Government  of  limited  and  granted  powers.  We  can  exer 
cise  no  authority  which  Congress  has  not,  by  reason  of  the  grant  of  some 
express  power,  or  some  power  necessarily  implied  from  that  which  is 
granted.  If  there  be  a  power  necessary  and  proper  to  carry  into  execu 
tion  any  of  the  granted  powers,  we  possess  it  under  the  general  clause  of 
the  Constitution  in  reference  to  that  subject.  The  power  to  make  a  legal 
tender  is  not  granted  expressly  in  the  Constitution,  nor,  as  I  think,  by 
any  implication  from  any  of  the  granted  powers.  It  is  true  there  is  a 
qualified  power  of  making  a  legal  tender  to  be  found  in  the  clause  which 


123 

authorizes  us  to  coin  money,  and  to  regulate  the  value  thereof,  because 
there  can  be  no  purpose  in  regulating  the  value  of  the  money  we  are 
authorized  to  coin,  except  to  make  it  a  legal  tender.  When  we  establish 
the  value  of  gold  and  silver  coin,  which  we  have  the  express  authority  to 
do,  we  of  course  have  the  implied  authority  to  declare  that  its  value  thus 
iixed  by  law,  shall  be  the  measure  of  value  in  all  contracts,  and  to  make 
it  a  legal  tender.  There  is  no  other  purpose  for  giving  us  the  authority 
to  regulate  the  value  of  the  money  which  we  are  authorized  to  coin ;  and, 
accordingly,  Congress  has  declared  silver  coins  to  be  a  legal  tender.  I  do 
not  know  whether  that  provision  is  in  the  law  regulating  the  value  of  the 
gold  coins.  I  suppose,  however,  that  it  must  be  so.  I  know  that  when  we 
passed  the  act  by  which  we  apportioned  the  silver  and  the  alloy  in  our 
silver  coins,  we  did  declare  that  coinage  to  be  a  legal  tender  for  sums 
under  five  dollars.  Even,  however,  if  that  were  not  so,  it  would  follow 
necessarily,  it  being  provided  in  the  Constitution  expressly  that  gold  and 
silver  may  be  coined  by  authority  of  Congress,  and  their  value  regulated 
by  law,  that  they  must  necessarily  be  a  legal  tender.  It  is  so  according 
to  the  custom  of  all  civilized  nations,  and  so  the  convention  that  framed 
the  Constitution  assumed  it  to  be.  But  I  can  see  no  power  from  which 
we  can  infer  authority  in  this  Government  to  make  paper  money  a  legal 
tender.  It  clearly  cannot  be  inferred  from  the  power  to  coin  money, 
which  is  to  be  made  of  metal.  I  do  not  see  how  it  is  to  be  inferred,  as  I 
think  one  Senator  derived  it,  from  the  power  to  borrow  money,  since,  to 
make  paper  money  cannot  be  necessary  to  the  execution  of  the  power  to 
borrow  money.  As  well  could  we  infer  a  general  authority  to  lend  money 
or  to  deal  in  brokerage. 

Mr.  President,  the  exigencies  of  the  country  are  very  great;  I  admit  my 
obligation  to  co-operate  with  gentlemen  here  in  furnishing  the  Govern 
ment  with  the  means  of  carrying  on  all  its  operations;  but  when  a 
constitutional  objection  is  presented  to  me,  the  very  allegiance  which  I 
owe  to  the  Constitution,  and  therefore  to  the  Union,  compels  me  not  to 
violate  any  one  of  its  provisions,  as  I  think  I  shall  do  if  I  vote  for  this  bill. 
I  must,  therefore,  cast  my  vote  against  it." 

Mr.  SAULSBUFky,  of  Delaware — <;It  was  my  desire  and  intention  to  vote 
for  this  bill,  provided  the  provision  making  these  notes  a  legal  tender  had 
been  stricken  out.  That  provision  has  been  retained  in  the  bill.  It  is  so 
clearly  unconstitutional,  in  my  opinion,  that  I  cannot  conscientiously  vote 
for  it.  I  cannot  attempt  at  this  late  hour  to  assign  the  reasons  for  my 
opinion.  The  speech  of  the  Senator  of  Vermont  has  not  been  answered, 
and  it  is  not  in  the  power  of  man  to  answer  it." 

Mr.  POWELL,  of  Kentucky— "It  is  not  my  purpose  to  make  a  speech. 
It  would  affordme  pleasure  to  vote  for  any  measure  I  thought  constitu 
tional  to  relieve  the  country  from  its  present  embarrassment ;  but  believing 
that  this  bill  is  unconstitutional,  I  cannot  vote  for  it.  I  had  intended,  if 
time  permitted — but  the  hour  is  too  late  now — to  give  briefly,  my  reasons 
for  the  vote  I  shall  give ;  but  after  the  very  exhaustive  speech  made  by 
the  Senator  from  Vermont  yesterday,  it  would  be  unnecessary,  particu 
larly  after  the  excellent  speech  made  by  the  Senator  from  Pennsylvania 
to-day,  and  the  brief  but  very  pointed  speech  of  the  Senator  from  Mary 
land,  who  has  just  taken  his  seat. 

In  my  judgment  this  bill  is  plainly  and  palpably  violative  of  the 
Constitution  of  the  United  States,  and  I  do  not  believe  that  issues  of  paper 
money,  unless  they  are  convertible  into  coin  at  the  pleasure  of  the  holder, 


124 

ever  did,  or  ever  will,  relieve  any  country  permanently  from  any  embar 
rassment.  I  think  all  such  issues  of  irredeemable  paper  lead  the  country 
into  further  and  greater  embarrassments,  instead  of  relieving  it;  and  I 
very  much  fear  that  those  who  expect  great  benefits  to  the  country  from 
this  bill  will  be  greatly  disappointed.  I  shall  not  detain  the  Senate  by 
speaking." 

PASSAGE    OF    THE    BILL. 

THE  PRESIDING  OFFICER— "The  question  is  on  the  passage  of  the  bill." 
Mr.  HOWARD — "I  call  for  the  yeas  and  nays." 

The  yeas  and  nays  were  ordered. 

Mr.  LATHAM,  of  California— "I  merely  desire  to  say,  in  order  that  I 
may  appear  right  upon  the  record,  that  I  have  entertained  very  grave 
doubts  during  this  discussion  as  to  the  constitutionality  of  the  legal 
tender  issue,  and  entertaining  those  doubts,  I  cast  my  vote  against  that 
clause  when  it  was  under  consideration.  The  majority  of  this  body  hav 
ing  now,  however,  indicated  their  desire  that  it  should  be  in  the  bill,  I 
cannot,  consistently  with  my  sense  of  duty,  withhold  my  vote  from  the 
bill.  I  shall  therefore  vote  for  it." 

Mr.  ANTHONY,  of  Rhode  Island— "I  voted  against  the  vital  clause  of 
this  bill  making  the  paper  issued  by  the  Government  a  legal  tender,  but 
having  no  project  of  my  own  to  present  to  the  Senate,  I  shall  not  take  the 
responsibility  of  voting  against  the  only  measure  which  is  proposed  by 
the  Government,  and  which  has  passed  the  House  of  Representatives,  and 
received  the  sanction  of  a  majority  of  this  body." 

The  question  being  taken  by  yeas  and  nays,  resulted — yeas  30, 
nays  7 ;  as  follows : 

Yeas — Messrs.  Anthony,  Chandler,  Clark,  Davis,  Dixon, 
Doolittle,  Fessenden,  Foot,  Foster,  Grimes,  Hale,  Harlan,  Har 
ris,  Henderson^  Howard,  Howe,  Lane  (of  Indiana),  Latham, 
McDougall,  Morrill,  Pomeroy,  Rice,  Sherman,  Simmer,  Ten  Eyck, 
Trumbull,  Wade,  Wilkinson,  Wilson  (of  Massachusetts)  and  Wil 
son  (of  Missouri) — 30. 

Nays — Messrs.  Collaruer,  Cowan,  Kennedy,  King,  Pearce, 
Powell  and  Saulsbury — 7. 

So  the  bill  was  passed. 

AUTHORSHIP    OF    THE    LEGAL    TENDER    BILL. 

Letter  of  JAMES  W.  SIMONTON  to  N.  Y.  Times. 

"WASHINGTON,  D.  C.,  Feb.  13,  1862. 

"The  passage,  by  the  Senate,  of  the  Treasury  K"ote  bill,  including  the 
legal  tender  clause,  is  a  subject  of  very  general  congratulation  among  the 
friends  of  the  Administration.  Among  the  opponents  of  the  legal  tender 
provision  were  some  of  the  ablest  and  firmest  friends  of  the  Administra 
tion,  whose  sincere  desire  for  the  most  effective  support  of  the  Government 
cannot  for  a  moment  be  justly  questioned.  They  honestly  believed  the 
policy  injudicious,  and  made  strenuous  fight  in  support  of  their  theory. 


125 

But  the  overwhelming  necessity  existing  for  the  measure  is  a  strcmger  argument 
than  anything  offered  against  the  bitt,  and  received  the  decisive  vote  of  30  to  7. 
Haying  made  their  record,  the  opposition  yielded  with  excellent  grace, 
and  the  Democratic  opponents  in  both  Houses  confess  to  a  sense  of  relief 
when  the  bill,  legal  tender  and  all,  had  passed.  There  are  few  members 
who  would  care  to  assume  the  responsibility  which  would  have  rested 
upon  them  in  the  event  of  the  defeat  of  the  measure,  and  the  risk  of  the 
consequences  to  themselves  of  the  financial  panic  that  would  speedily 
follow  the  admitted  bankruptcy  of  the  Government. 

Xow  that  the  bill  has  passed,  it  is  but  just  that  due  credit  should  be 
awarded  to  the  author  of  the  legal  tender  scheme,  the  Hon.  E.  G.  Spauld- 
ing,'Member  of  Congress  from  the  Buffalo  (X.  Y.)  District.  It  was  Mr. 
Spaulding  who  originated  the  proposition  to  force  a  fixed  paper  currency 
upon  the  country  by  making  Treasury  notes  a  legal  tender.  His  practical 
knowledge  and  experience  as  a  banker  and  financier,  early  disclosed  to  his 
own  mind  the  fact,  which  since  then  has  become  so  patent  to  overwhelm 
ing  majorities  in  each  House  of  Congress  and  the  country,  to  wit:  that  no 
other  scheme  could  possibly  provide  for  the  wants  of  the  Government  in 
time  to  save  it  from  absolute  financial  ruin.  He  gave  the  subject  unremit 
ting  study  and  attention,  devoting  to  it  the  entire  holiday  season,  and 
maturing,  finally,  a  measure  which  has  received  the  endorsement  of  the 
Administration  and  of  Congress,  and  withstood  the  combined  assaults  of 
selfish  and  honest  opponents  alike.  He  has  reason  to  be  proud  of  the 
triumph  he  has  achieved,  and  the  country  will  not  soon  forget  hia 
services/' 

OBJECTION    TO    SENATE    AMENDMENTS. 

The  main  principles  of  the  bill  seemed  to  be  well  settled  by  the 
preceding  full  and  able  discussion,  and  its  passage  by  large  ma 
jorities  through  both  Houses;  and  the  Secretary  of  the  Treasury 
in  administering  the  Finances  during  the  war,  would  find  it  easy 
to  execute  the  two  simple  provisions  of  the  bill,  viz : 

1.  Issue  these  Treasury  notes  fitted  for  circulation  as  money,  and  by 
the  legal  tender  provision  made  a  forced  loan  from  the  people  to  the  Gov 
ernment,  without  interest,  which  could  only  be  justified  by  the  imperative 
necessities  of  the  Treasury,  and  by  the  fair  and  equitable  provision, 

2.  That  these  notes  might  at  any  time,  at  the  option  of  the  holder,  be 
funded  in  six  per  cent,  twenty  jrear  bonds,  interest  payable  semi-annually. 

The  Secretary  could  issue  notes  and  pay  them  out  for  supplies 
and  material  of  war,  and  to  the  Army  and  Navy,  making  money 
plenty,  and  filling  all  the  channels  of  circulation,  which  would,  as 
soon  as  it  became  redundant,  enable  him  to  float  the  six  per  cent, 
bonds,  and  funding  Would  take  place,  thereby  preventing  too  great 
an  excess  of  this  circulating  medium.  The  Senate  amendments 
seemed  in  some  measure  to  complicate  these  simple  provisions. 
Several  of  the  amendments  of  the  Senate  were  very  important  in 
regard  to  details  and  special  provisions  of  the  bill,  but  the  most 
of  them  were  verbal  and  unimportant.  The  four  amendments  of 


126 

the  Senate,  to  which  a  large  number  of  the  members  of  the  House 
made  the  most  objection,  were  in  substance  as  follows: 

1.  Requiring  payment  of  'interest  semi-annually  in  coin  on  bonds  and 
7-30  notes.' 

2.  Conferring  on  the  Secretary  power  to  sell  six  per  cent,  bonds,  '  at 
the  market  value  thereof  for  coin,'  which  would  reduce  the  price. 

3.  And  the  provision  making  the  bonds  4  redeemable  in  five  years,  and 
payable  in  twenty  years  from  date,'  at  the  option  of  the  Government, 
making  them  less  valuable. 

4.  Temporary  deposits  in  the  Sub-Treasury  at  C  per  cent.,  which  would 
retard  funding  in  long  bonds. 

All  former  loan  laws  passed  by  Congress,  from  the  organization 
of  the  Government  to  this  time,  contained  only  a  provision  to 
pay  *  dollars. '  The  word  dollars  had  a  well  known  legal  meaning 
under  our  coinage  and  legal  tender  laws,  and  it  was  difficult  to 
see  any  good  reason  for  changing  the  phraseology,  and  thereby 
make  a  departure  from  established  usages  at  this  time,  especially 
if  six  per  cent,  bonds  (which  were  then  selling  at  about  88,) 
should,  as  a  necessary  consequence  of  such  provision,  be  sold  at 
the  market  price  to  raise  the  coin  to  pay  this  interest.  At  this  stage 
of  the  bill  there  was  no  provision  in  it,  or  in  the  Senate  amendments,  to 
collect  the  duties  on  foreign  imports  in  coin,  so  that  as  the  bill  then  stood, 
there  was  no  other  mode  of  obtaining  the  coin  except  by  a  forced  sale  of 
bonds.  This  coin  provision  was  deemed  by  many  members  to  be 
an  unnecessary  discrimination  in  favor  of  the  bond-holders  over 
other  creditors  of  the  Government  equally  meritorious.  It  was 
difficult  to  see  the  propriety  of  paying  coin  interest  to  the  bond 
holders  while  the  soldiers  and  others  were  paid  in  notes;  and 
besides,  the  terms  used  made  the  coin  payment  of  interest 
applicable  to  the  7-30  Treasury  notes  and  bonds  issued  to  the 
banks  during  the  previous  summer. 

BILL    RETURNED    TO    THE    HOUSE. 

The  bill  and  Senate's  Amendments  were  returned  to  the  House 
on  the  14th  inst,  and  on  motion  of  Mr.  Stevens,  were  referred  to 
the  Committee  of  Ways  and  Means.  This  Committee  had  a  long- 
discussion  upon  the  Senate's  Amendments,  and  were  about  equally 
divided  on  the  most  material  and  important  of  them.  Some  were 
disagreed  to,  others  were  concurred  in,  and  some  unimportant 
amendments  to  the  Senate  amendments  wrere  recommended.  On 
the  18th,  Mr.  Stevens,  from  the  Committee  of  Ways  and  Means, 
reported  back  the  bill  and  amendments  to  the  House  and  said: 


127 

"  I  have  no  purpose  of  considering  the  bill  at  this  time.  I  desire  that 
it  shall  be  referred  to  the  Committee  of  the  Whole,  and  be  made  the 
special  order  for  to-morrow  at  one  o'clock.  I  hope  gentlemen  of  the 
House  will  read  the  amendments.  They  are  very  important,  and,  in  my 
judgment,  very  pernicious,  but  I  hope  the  House  will  examine  them." 

The  motion  was  agreeed  to. 

On  Wednesday,  the  19th  inst.,  the  amendments  of  the  Senate 
to  the  bill  being  the  special  order,  Mr.  Spaulding  opened  the 
debate  in  opposition  to  some  of  them,  as  follows : 

MR.  SPAULDING'S  SPEECH. 

Mr.  CHAIRMAN— I  desire  especially  to  oppose  the  amendments  of  the 
Senate  which  require  the  interest  on  bonds  and  notes  to  be  paid  in  coin 
semi-annualljT,  and  which  authorizes  the  Secretary  of  the  Treasury  to 
sell  six  per  cent,  bonds  at  the  market  price  for  coin  to  pay  the  interest. 

The  Treasury  note  bill,  as  reported  first  from  the  Committee  of  Ways 
and  Means  as  a  necessary  war  measure,  was  simple  and  perspicuous  in  its 
terms,  and  easily  understood.  It  was  so  plain  that  everybody  could 
understand  that  it  authorized  the  issue  of  $150,000,000  of  legal  tender 
demand  notes,  to  circulate  as  a  national  currency  among  the  people  in  all 
parts  of  the  United  States,  and  that  they  might,  at  any  time,  be  funded 
in  six  per  cent,  twenty  years'  bonds.  The  passage  of  this  measure  in 
this  House  was  hailed  with  satisfaction  by  the  great  mass  of  people  all 
over  the  country.  It  received  the  hearty  indorsement  of  such  bodies  as 
the  Chambers  of  Commerce  of  New  York,  Cincinnati,  St.  Louis,  Chicago, 
Buffalo,  Milwaukee,  and  other  places.  I  have  never  known  any  measure 
receive  a  more  hearty  approval  from  the  people. 

Nearly  every  amendment  to  the  bill  since  it  was  matured  has  rendered 
it  more  complex  and  difficult  of  execution.  I  'regret  to  say  that  some  of 
the  amendments  of  the  Senate  render  the  bill  incongruous,  and  tend  to 
defeat  its  great  object,  namely:  to  prevent  all  forcing  of  the  Government 
to  sell  its  bonds  in  the  market  to  the  highest  bidder  for  coin.  It  might  be 
very  pleasant  for  the  holders  of  the  seven  and  three-tenths  Treasury 
notes  and  six  per  cent,  bonds,  to  receive  their  interest  in  com  semi- 
annually,  but  very  disastrous  to  the  Government  to  be  compelled  to  sell 
its  bonds,  at  ruinous  rates  of  discount,  every  six  months  to  pay  them  gold 
and  silver,  while  it  would  pay  only  Treasury  notes  to  the  soldier,  sailor, 
and  all  other  creditors  of  the  Government. 

I  am  opposed  to  all  those  amendments  of  the  Senate  which  make  unjust 
discriminations  between  the  creditors  of  the  Government.  A  soldier  or 
sailor  who  performs  service  in  the  army  or  navy  is  a  creditor  of  the  Gov 
ernment.  The  man  who  sells  food,  clothing,  and  the  material  of  war,  for 
the  use  of  the  army  and  navy  is  a  creditor  of  the  Government.  The  capi 
talist  who  holds  your  seven  and  three-tenths  Treasury  notes,  or  your  six 
per  cent,  coupon  bonds  is  a  creditor  of  the  Government.  All  are  creditors 
of  the  Government  on  an  equal  footing,  and  all  are  equally  entitled  to  their 
pay  in  gold  and  silver. 

I  am  opposed  to  all  those  amendments  of  the  Senate  which  discriminate 
in  favor  of  the  holders  of  bonds  and  notes  by  compelling  the  Government 
to  go  into  the  streets  every  six  months  to  sell  bonds  at  the  'market  price,' 
to  purchase  gold  and  silver  in  order  to  pay  the  interest  '  in  coin '  to  the 


128 

capitalists  who  now  hold  United  States  stocks  and  Treasury  notes  here 
tofore  issued,  or  that  may  hold  bonds  and  notes  hereafter  to  be  issued; 
while  all  other  persons  in  the  United  States  (including  the  Army  and 
Navy  and  all  who  supply  them  food  and  clothing,)  are  compelled  to 
receive  legal  tender  Treasury  notes  in  payment  of  demands  due  them  from 
the  Government. 

Why  make  this  discrimination  ?  Who  asks  to  have  one  class  of  creditors 
placed  on  a  better  footing  than  another  class?  Do  the  people  of  New 
England,  the  Middle  States,  or  the  people  of  the  West  and  Northwest,  or 
anywhere  else  in  the  rural  districts,  ask  to  have  any  such  discrimination 
made  in  their  favor  ?  Does  the  soldier,  the  farmer,  the  mechanic,  or  the 
merchant  ask  to  have  any  such  discrimination  made  in  his  favor  ?  No, 
sir ;  no  such  unjust  preference  is  asked  for  by  this  class  of  men.  They  ask 
for  the  legal  tender  note  bill  pure  and  simple.  They  ask  for  a  national 
currency  which  shall  be  of  equal  value  in  all  parts  of  the  country.  They 
want  a  currency  that  shall  pass  from  hand  to  hand  among  all  the  people 
in  every  State,  county,  city,  town  and  village  in  the  United  States.  They 
want  a  currency  secured  by  adequate  taxation  upon  the  whole  property 
of  the  country,  which  will  pay  the  soldier,  the  farmer,  the  mechanic,  and 
the  banker  alike  for  all  debt  due.  They  ask  that  the  Government  shall 
stand  upon  its  own  responsibility,  its  own  rights,  and  exert  its  vast 
powers,  preserve  its  own  credit,  and  carry  us  safely  through  this  gigantic 
rebellion,  in  the  shortest  time,  and  with  the  least  possible  sacrifice.  They 
intend  to  foot  all  the  lills,  and  ultimately  pay  the  whole  amount,  principal  and 
interest,  in  gold  and  silver. 

Who,  then,  are  they  that  ask  to  have  a  preference  given  to  them  over 
other  creditors  of  the  Government  ?  Sir,  it  is  a  very  respectable  class  of 
gentlemen,  but  a  class  of  men  who  are  very  sharp  in  all  money  transac 
tions.  They  are  not  generally  among  the  producing  classes — not  among 
those  who,  by  their  labor  and  skill,  make  the  wealth  of  the  country ;  but  a 
class  of  men  that  have  accumulated  wealth— men  who  are  willing  to  lend 
money  to  the  Government  if  you  will  make  the  security  beyond  all  ques 
tion,  give  them  a  high  rate  of  interest,  and  make  it  payable  in  coin.  Yes, 
sir,  the  men  who  are  asking  these  extravagant  terms,  who  want  to  be  pre 
ferred  creditors,  are  perfectly  willing  to  lend  money  to  the  Government 
in  her  present  embarrassment,  if  you  will  only  make  them  perfectly  secure, 
give  them  extra  interest,  and  put  your  bonds  on  the  market  at  the  '  market 
price,'  to  purchase  gold  and  silver  to  pay  them  interest  every  six  months. 
Yes,  sir,  entirely  willing  to  loan  money  on  these  terms !  Safe,  no  hazard, 
secure,  and  the  interest  payable  'in  coin!'  Who  would  not  be  willing  to 
loan  money  on  such  terms  ?  Sir,  the  legal  tender  Treasury  note  bill  was 
intended  to  avoid  all  such  financiering  and  protect  the  Government  and 
people,  who  pay  the  taxes,  from  all  such  hard  bargains.  It  was  intended 
as  a  shield  in  the  hands  of  the  patriotic  people  of  the  country  against  all 
forced  sales  of  bonds,  and  all  extravagant  rates  of  interest. 

The  legal  tender  note  bill  is  a  great  measure  of  equality.  It  proposes  a 
currency  for  the  people  which  is  based  upon  the  good  faith  of  the  people 
and  all  their  taxable  property.  All  are  obliged  to  receive  and  pass  it  as 
money,  and  all  are  obliged  to  submit  to  heavy  taxation  to  provide  for  its  ultimate 
redemption  in  gold  or  silver.  Every  attempt  on  the  part  of  any  class  of  citi 
zens  to  create  distinctions  and  secure  a  legal  preference,  mars  the  sini" 
plicity  and  success  of  the  whole  plan.  The  very  discrimination  proposed 
carries  on  its  face  notice  to  everybody  that  although  the  notes  are  declared 


129 

to  be  'lawful  money  and  a  legal  tender  in  payment  of  debts,'  yet  that 
there  is  something  of  higher  value,  that  must  be  sought  after  at  a  sacrifice 
to  the  Government,  to  pay  a  peculiar  class  of  creditors  to  whom  it  owes 
money — a  kind  of  absurdity  and  self-stultification  which  does  not  appear 
well  on  the  face  of  the  bill.  It  is  an  unjust  discrimination  which  does  not 
appear  well  now,  and  will  not  look  well  in  history.  You  will,  if  the  Senate's 
amendment  is  adopted,  depreciate,  by  your  own  acts,  your  own  bonds  and  notes, 
and  effectually  destroy  the  symmetry  and  harmonious  ivorking  of  the  whole  plan. 

I  am  in  favor  of  having  the  Government  pay  in  coin,  if  it  can  do  so  without  too 
great  a  sacrifice ;  but  I  am  unable  to  see  any  good  reason  for  departing,  in  this 
case,  from  the  usual  practice  of  the  Government  in  expressing  the  mode  of  paying 
the  interest.  All  bonds  and  Treasury  notes  heretofore  issued  are  payable  gener 
ally  without  specifying  that  either  the  principal  or  the  interest  shall  be  paid  in 
coin,  and  yet  the  legal  effect  is  the  same.  I  do  not  see  why  we  should  now,  in 
the  present  embarrassed  condition  of  the  Goverment,  give  any  preference 
to  one  creditor  over  another,  or  change  the  form  of  our  bonds  and 
Treasury  notes  by  inserting  the  words  'payable  in  coin.'  The  capitalist 
who  holds  your  bonds  or  seven  and  three-tenths  Treasury  notes  is  not 
entitled  to  any  preference  over  the  soldier  or  the  man  who  furnishes  sup 
plies  to  your  Army.  We  should  pay  both  in  specie,  if  possible ;  but  I  am 
unwilling  to  tie  up  the  hands  of  the  Government  by  compelling  it  to  pay 
'in  coin,'  the  interest  on  all  the  bonds  and  notes  heretofore  issued,  or  that 
may  hereafter  be  issued.  The  bonds  and  notes  heretofore  issued  contain 
no  such  express  provision ;  it  is  not  '  so  nominated  in  the  bond ;'  and  I  am 
unwilling  to  have  it  inserted  at  this  time,  either  as  to  those  now  outstand 
ing  or  as  to  those  that  are  hereafter  to  be  issued.  Besides,  if  you  com 
mence  in  this  way,  by  stipulating  expressly  to  pay  in  coin  on  the  bonds 
to  be  issued,  it  becomes  a  contract  which  cannot,  without  a  breach  of 
faith,  be  changed  by  a  repeal  of  the  law.  You  unnecessarily  commit  the 
Government  to  a  stipulation  which  may  be  very  inconvenient,  if  not 
impossible,  to  fulfill,  if  the  public  debt  runs  up  to  $2,000,000.000,  the 
interest  upon  which,  at  six  per  cent,  per  annum,  would  be  $120,000,000 
annually,  requiring  $60,000,000  of  coin  every  six  months  to  pay  interest  on 
your  funded  debt.  I  think  we  should  pause  before  committing  ourselves 
to  any  such  proposition,  for  no  man  here  is  wrise  enough  to  tell  how  long 
this  war  will  continue,  or  how  many  complications  with  foreign  nations 
will  grow  out  of  it,  or  how  great  will  be  the  war  debt.  JBy  all  means  let  us 
pay  the  interest  in  gold  to  those  who  desire  it,  if  it  is  practicable  to  do  so;  but  let 
us  keep  the  power  in  the  Government  itself,  and  exercise  it  wisely  for  the 
best  interest  of  the  whole  people. 

The  people  in  the  country  who  hold  seven  and  three-tenths  Treasury 
notes  are  patriotic  enough,  while  the  war  lasts,  to  receive  their  interest  in 
any  money  that  will  pass  currently  at  the  banks  and  among  the  people. 
Money  with  them  is  only  valuable  for  its  uses.  Legal  tender  Treasury 
notes  can  be  used  for  all  business  purposes,  without  compelling  the  Gov 
ernment  to  sell  its  bonds  at  fifteen  or  twenty  per  cent,  discount  to  procure 
coin  when  it  is  entirely  unnecessary. 

At  the  extra  session  in  July  we  passed  two  very  important  bills — one  to 
borrow  $250,000,000,  for  which  bonds  and  notes  were  to  be  issued,  and  the 
other  to  call  into  the  service  five  hundred  thousand  volunteers,  and  pay 
the  soldiers  thirteen  dollars  per  month,  and  the  ofticers  a  higher  rate  of 
fixed  compensation,  Both  bills  were  war  measures,  both  were  necessary, 
and  action  has  been  had  under  both.  Under  the  first  bill  the  associated 


130 

banks  of  Kew  York,  Boston  and  Philadelphia  took  the  sum  of  $100,000,- 
000  of  seven  and  three-tenths  three  years  Treasury  notes  at  par,  and 
$50,000,000  twenty  years  six  per  cent,  bonds  at  a  discount  of  ten  and  two 
thirds  per  cent,  from  their  face— say  net  $44,061,230.97,  being  a  loss  of 
$5,338,709.03  on  this  transaction.  This  is  a  higher  rate  of  interest  than 
our  Government,  with  all  its  immense  power  and  resources,  ought  to  pay; 
but  the  loan  has  been  made,  and  I  only  refer  to  it  now  for  the  purpose  of 
showing1  what  has  been  done  under  these  two  acts  of  Congress. 

Under  the  army  bill,  five  hundred  thousand  volunteers  have  been  called 
into  the  service,  and  are  now  in  the  lield.  Under  both  of  these  bills  a 
debt  has  been  created  against  the  Government.  The  associated  banks  of 
New  York,  Boston  and  Philadelphia  are  creditors  of  the  Government  to 
the  extent  of  $150,000,000.  The  five  hundred  thousand  volunteer  army 
are  also  creditors  of  the  Government  to  a  large  amount.  We  owe  them 
both,  and  both  are  creditors  under  laws  passed  by  us  at  the  extra  session. 
Are  not  both  classes  of  these  creditors  on  the  same  footing?  Are  the 
bankers  entitled  to  any  preference  over  the  volunteer  army?  Is  the 
banker's  money  any  more  sacred  than  the  services  of  the  soldier  in  battle, 
on  guard,  or  in  the  tented  field?  I  cannot  see  that  the  banker  or  the 
holder  of  Treasury  notes  is  entitled  to  any  preference  over  the  soldier, 
under  these  two  laws  of  Congress,  and  yet,  if  you  concur  in  these  hard- 
money  amendments  of  the  Senate,  you  will  compel  the  soldier  to  take 
legal  tender  Treasury  notes  in  payment  for  his  thirteen  dollars  per  month 
which  you  agreed  to  pay  him,  while  you  pay  the  banker  his  high  rate  of 
interest,  semi-annually,  in  gold  and  silver  coin.  Is  this  right?  Will  this 
be  meting  out  just  and  equal  laws  to  the  loyal  citizens  of  this  Govern 
ment  ?  What  will  your  army  say  to  an  arrangement  of  this  kind  ?  Sir,  I 
can  consent  to  no  such  discrimination,  no  such  amendment,  no  such 
injustice.  *  *  *  *  *  *  ****** 

It  is  to  be  hoped  that  this  will  be  a  short  war.  It  is  very  desirable  that 
it  should  be  pressed  on  with  the  utmost  vigor,  and  be  brought  to  a  speedy 
and  successful  termination.  God  grant  that  this  may  be  the  issue.  I 
have  no  expectation,  however,  that  the  authority  of  the  United  States 
Government  will  be  respected  and  enforced  in  all  the  Southern  States  for 
many  years.  I  think  the  rebels  are  desperate  and  determined,  and  will 
never  submit  to  the  Constitution  and  laws  until  compelled  to  do  so  by 
armed  force.  They  may  be  beaten  and  compelled  to  fall  back,  but  until 
Union  governments  are  successfully  established  in  all  the  Southern  States 
the  laws  of  the  United  States  will  not  be  respected,  and  can  only  be 
enforced  by  the  army  and  navy  in  actual  occupation  of  the  rebellious 
States.  This  will  require  a  large  and  expensive  army  for  many  years,  the 
total  expenses  of  which  cannot  now  be  estimated.  It  will  require  Federal 
troops  in  every  rebellious  State  to  collect  your  direct  taxes  and  internal 
duties;  and  until  you  can  peaceably  collect  taxes  in  all  the  rebellious 
States  the  rebellion  is  not  ended.  *  * 

In  every  aspect  in  which  you  view  this  hard-money  provision,  its  prac 
tical  workings  will  be  disastrous.  It  would  be  all  very  well  if  the  amount 
was  small  and  applied  to  carrying  on  the  Government  on  a  peace  footing, 
when  you  know  what  amount  will  be  required ;  but  in  carrying  on  the 
Government  at  this  time,  when  the  magnitude  of  the  expenditures  are  so 
overwhelming,  all  theories  applicable  to  peace  must  give  way  to  the  inexo 
rable  necessities  that  are  forced  upon  us  in  the  prosecution  of  this  war. 
Look  at  your  long  line  of  offensive  operations,  extending  from  Kansas  to 


131 

tliis  capital,  and  thence  to  Fortress  Monroe,  Hatteras,  Beaufort,  Key  West, 
Pensacola,  and  Ship  Island — a  distance  of  more  than  four  thousand  miles. 
This  very  long  line  of  military  operations  cannot  be  maintained  except  at 
an  enormous  expense  for  transportation,  supplies,  and  material  of  war. 
One  million  six  hundred  thousand  dollars  does  not  cover  the  daily  expen 
ditures.  Peace  theories  of  finance  must  give  way  to  what  is  practicable  to 
be  done  in  the  present  exigency.  The  Government  is  at  this  momen^in 
the  situation  of  a  merchant  who  has  overtraded,  who  owes  more  than  he 
has  the  present  means  of  paying.  He  may  be  compelled  to  stop  payment 
in  specie,  when  he  has  ample  assets  to  cover  all  his  liabilities.  A  mere 
suspension  of  specie  payments  does  not  imply  bankruptcy  or  insolvency. 

Our  country  and  Government  at  all  hazards  must  be  preserved.  To 
accomplish  this,  our  plan  of  finance  must  be  simple  and  practical.  As  has 
been  shown,  we  have  various  descriptions  of  property  in  abundance.  We 
have  not  the  money  to  meet  the  sudden  demands  that  are  thrown  upon  us. 
Is  it  not  better  to  pledge  our  honor,  our  lands,  houses,  personal  estate, 
incomes,  and  wealth  of  all  kinds  to  create  this  money,  on  the  faith  of  the 
nation,  than  to  run  the  risk  of  utter  ruin  to  all  interests  for  the  sake  of 
holding  on  to  theories  which  may  be  excellent  in  time  of  peace,  but  which 
are  wholly  impracticable  in  the  prosecution  of  this  war. 

It  is  very  clear  that  in  the  prosecution  of  this  war  to  maintain  this 
Union,  the  ways  and  means  of  carrying  it  on  can  only  be  limited  by  the 
actual  expenditures. 

We  must,  while  the  war  lasts,  incur  all  the  debt  necessary  to  crush  out 
the  rebellion,  and  maintain  the  authority  of  the  United  States  Government 
over  all  the  thirty-four  States.  We  cannot,  therefore,  now  limit  the 
amount  of  the  debt  to  be  incurred,  nor  can  it  be  accurately  estimated. 
Notes  and  bonds  must  be  issued  in  some  form  for  all  the  debt  incurred, 
excepting  what  we  may  realize  annually  from  taxes,  excises,  and  duties 
on  imports.  In  issuing  these  notes  and  bonds  I  think  it  will  be  much 
better  for  the  Government,  and  for  the  people,  to  have  one  uniform  , 
system.  It  would  be  better  for  all  concerned  to  have  a  fixed  policy,  not 
to  be  changed,  so  that  all  business  men  may  conform  to  it  at  once.  That 
policy  should,  in  my  judgement,  be  the  issue  of  legal  tender  demand 
Treasury  notes  not  bearing  interest,  to  be  paid  out  for  what  is  necessary 
to  support  the  army  and  navy,  and  fundable  at  any  time  in  twenty  years 
bonds,  bearing  interest  at  six  per  cent.,  payable  semi-annually.  This  is 
as  high  a  rate  of  interest  as  the  Government  ought  to  pay,  especially  as  our 
people  are  to  be  heavily  burdened  by  taxation  to  pay,  ultimately,  the 
interest  and  principle  in  gold  and  silver  of  all  this  debt.  Let  our  policy  be 
distinctly  fixed  and  settled,  and  we  shall  hear  no  further  importunities  for 
higher  rates  of  interest,  or  for  any  preference  of  one  class  of  creditors  over 
any  other  class  equally  meritorious. 

I  regret  that  my  sense  of  duty  compels  me  to  differ  so  widely  from  the 
Senate.  I  have  great  respect  for  that  body,  and  would  gladly  yield  to 
their  views,  if  I  did  not  regard  it  so  fatal  to  the  public  interest.  So  soon 
as  our  funded  debt  reaches  $700,000,000,  which  will  be  in  a  very  few 
months,  I  believe  it  will  be  impossible  to  procure  the  coin  to  pay  the 
interest  semi-aimually  without  the  most  serious  consequences  to  our 
credit.  The  amount  of  discount  on  our  bonds  to  procure  specie  would  be 
very  large.  In  every  view,  the  Senate  amendment  seems  to  me  unneces 
sary,  injurious,  partial  and  unjust.  I  trust  the  House  will  non-concur  in 
the  amendments.'' 


132 

At  the  time  the  above  remarks  were  made  by  Mr.  Spanieling, 
the  duties  on  imports  were,  as  the  bill  then  stood,  payable  in  legal 
tender  notes,  but  this  was  afterwards  changed  in  the  Committee 
of  Conference,  making  those  duties  payable  in  coin,  so  that  the 
interest  might  be  paid  in  coin,  without  being  obliged  to  force  the 
bonds  on  the  market  to  obtain  coin  for  that  purpose.  This  was 
probably  the  best  compromise  that  could  be  made,  as  will  more 
fully  appear  in  finally  adjusting  the  disagreeing  votes  between  the 
Senate  and  House. 

SPEECH    OF    MR.     POMEROY. 

Mr.  POMEROY,  of  New  York,  spoke  one  hour  in  favor  of  paying 
the  interest  in  coin  on  bonds  and  Treasury  notes.  He  said : 

"The  action  already  had  upon  the  bill  has,  so  far  as  the  sense  of  Con 
gress  is  concerned,  settled,  if  not  the  constitutionality  and  expediency  of 
issuing,  to  a  limited  amount,  Treasury  notes,  made  a  legal  tender  in  pay 
ment  of  debts,  at  least  the  existence  of  a  necessity,  under  which  such 
constitutional  power  will  be  assumed  and  its  exercise  declared  expedient. 
I  do  not  propose,  therefore,  to  enter  at  all  upon  the  discussion  of  those 
questions,  nor  would  it  be  pertinent  to  the  only  amendment  I  propose  to 
discuss,  to  wit:  that  providing  for  payment  of  interest  on  the  national 
debt  in  coin.  They  were  fully  discussed  when  the  bill  Avas  first  before  the 
committee,  to  the  neglect,  as  I  then  thought  and  now  think,  of  the  point 
presented  by  the  pending  amendment,  upon  which  alone  I  desire  to 
submit  a  few  remarks. 

The  question  is  not  now  whether  $150,000,000  of  Treasury  notes  shall  be 
issued  and  made  a  legal  tender  in  payment  of  public  and  private  indebt 
edness.  That  proposition  has  been  decided  in  the  affirmative;  but  if  my 
faith  in  the  necessity  and  expediency  of  such  issue  was  stronger  even  than 
that  of  the  able  and  distinguished  Representative,  [Mr.  Spaulding,]  who 
has  originated  this  measure,  and  carried  it  triumphantly  over  the  Admin 
istration  and  through  Congress,  still,  deeming  this  amendment,  as  pro 
posed  by  the  Senate  and  now  under  consideration,  vital  to  the  success  of 
the  scheme,  and  the  only  regulation  by  which  financial  explosion  under  it 
can  be  prevented,  I  could  not,  as  an  original  proposition,  and  cannot  now, 
without  such  amendment,  support  this  bill.  My  opinion  may  be  unfounded 
and  erroneous.  I  hope  it  is,  if  this  amendment  is  to  fail.  I  have  no  pride 
of  opinion  upon  this  matter,  but  I  have  convictions,  clear,  decided  and 
conscientious,  which  I  cannot  trample  upon  without  violating  my  own 
sense  of  self-respect  and  of  public  duty.  The  opposition  which  this 
amendment  meets  from  the  framers  of  the  bill  sufficiently  demonstrates  to 
us  and  to  the  country  that  it  is  not  merely  formal  in  its  character,  but  is 
of  primary  importance  and  entitled  to  the  highest  consideration.  I  shall 
be  very  brief,  and  will  endeavor  to  be  plain  in  my  views  respecting  it. 

It  is  conceded  by  the  friends  of  the  House  bill,  that  the  policy  of  issuing 
Treasury  notes  under  it  with  the  characteristics  of  money  is  to  be  tempo 
rary,  and  that  it  is  a  divergence  from  the  correct  principles  of  political 
economy,  to  be  justified  only  by  necessity,  and  yet  the  primary  and 
principal  f^iult  I  find  with  it  is,  that  instead  of  being  a  temporary  measure, 
it  really,  by  its  failure  to  make  adequate  provision  to  raise  money  by  loan, 


133 

inaugurates  and  necessitates  the  perpetuation  of  a  reliance  upon  a  forced 
paper  currency  alone  to  meet  the  demands  of  the  war,  the  amount  of  the 
issue  of  which,  if  sufficient  for  that  purpose,  must  depreciate  it  to  a  mere 
nominal  value,  and  result  in  ultimate  repudiation.  It  may  lie  expedient  as 
a  remedy  for  an  existing  political  disorder,  but  it  is  death  if  relied  upon  for  per 
manent  existence. 

The  credit  of  the  Government  has  been  recently  brought  to  the  test  of 
practical  experiment  in  a  much  more  favorable  time  than  the  present, 
when  the  .banks  were  plethoric  with  gold  beyond  all  former  experience 
and  promptly  meeting  all  engagements  in  coin,  when  suspension  had  not 
been  thought  of,  and  the  patriotism  of  the  people  was  fully  aroused  in  the 
enlistment  of  those  armies  that  are  to-day  more  than  meeting  our  proudest 
anticipations;  and  yet,  under  those  most  favorable  auspices,  the  rate  of 
interest,  as  established,  was  seven  and  three-tenths  per  cent,  for  three 
year  coupon  bonds,  and  seven  per  cent,  for  those  running  twenty  years, 
each  payable  semi-annually  in  coin,  and  with  the  added  advantage  to  the 
banks,  who  were  the  purchasers,  of  holding  the  proceeds  on  deposit  with 
out  interest  until  drawn  out  in  the  usual  course  of  expenditure;  and 
$50,000,000  of  the  long  bonds,  authorized  at  the  extra  session,  have  not 
been,  and  could  not  be,  sold  even  at  the  rate  above  named.  *  *  * 

The  science  of  Government  is  one  purely  experimental.  A  code  of  laws 
designed  for  men  as  they  ought  to  be,  would  be  a  terrible  code  applied  to 
men  as  they  are.  We  experience  no  difficuly  in  recognizing  in  legislation 
the  natural  laws  of  matter,  and  we  should,  have  no  more  in  recognizing 
the  natural  laws  of  mind,  association,  trade,  commerce  and  business. 

If  wTe  are  to  borrow  money,  we  must  recognize  these  laws ;  and  I  may 
well  call  them  higher  laws,  for  while  legislation  cannot  change  them,  they 
are  continually  changing  legislation.  One  of  these  is  that  the  precious 
metals  are  the  representative  of  value.  The  gold  dollar  of  our  currency  is  the 
unit,  of  value.  Conversion  into  this  representative  is  the  only  criterion  of  value. 
Those  who  invest  money  or  loan  will  make  it  a  condition  precedent  that 
the  interest  shall  be  in  money,  and  not  in  promises  to  pay  money.  Legisla 
tion  has  not  changed,  and  cannot  change,  paper  currency  into  coin  or  its 
equivalent,  except  through  convertibility.  Without  this  requisite  it  is  a 
mere  naked  promise.  We  cannot  make  Treasury  notes  money  until  we 
can  change  by  act  of  Congress  a  promise  into  a  performance,  and  Almighty 
power  alone  can  do  that.  We  propose  to  compel  the  Government  and 
citizens  to  receive  this  paper  as  money  in  payment  for  debt ;  but  we  do 
not  propose  to  attempt  to  compel  anybody  to  take  it  by  way  of  loan,  nor 
to  compel  anybody  to  loan  it,  not  even  to  Government.  Then  people  must 
be  induced  to  loan  it ;  and  how  can  you  expect  them  to  do  it  at  rates  less 
favorable  than  you  have  already  established  in  more  prosperous  times, 
to  wit:  a  rate  of  seven  and  three-tenths  per  cent.,  payable  in  coin. 

Xow,  this  paper  is  or  is  not  equal  to  gold.  My  colleague  may  take 
whichever  horn  of  the  dilemma  he  pleases.  If  it  is  not,  it  is  folly  to 
suppose  that  people  are  voluntarily  going  to  place  themselves  in  a  position 
where,  for  a  term  of  years,  they  compel  themselves  to  receive  it  as  interest, 
and  assume  all  the  risk  of  depreciation.  If  it  is  equal,  then  there  can  be 
no  unjust  discrimination  in  paying  interest  in  gold.  I  prefer  to  look  at 
the  question  just  as  it  is,  and  admit  the  fact  that  it  is  not  and  cannot  be 
made  equal,  because  it  lacks  the  essential  quality  of  convertibility.  To  the 
extent  to  which  it  is  not  equal,  we  work  a  hardship  in  forcing  it  into  cir 
culation;  but  we  have  already  decided  that  a  necessity  exists  which 


134 

compels  us  to  accept  this  hardship  rather  than  to  inflict  upon  the  people 
or  submit  the  Government  to  a  greater.  And  we  believe  farther,  that  the 
evils  thus  produced  will,  in  the  aggregate,  if  not  in  each  individual  case, 
be  more  than  compensated  by  the  relief  they  will  afford  from  financial 
stringency,  and  as  a  medium  of  exchanges,  especially  with  the  Govern 
ment  itself. 

While,  however,  we  exercise  the  power  to  compel  the  people  to  receive 
it  as  gold  in  payment  of  debts,  we,  unfortunately,  have  not  the  power  to 
compel  them  to  loan  it  back  to  us  on  time,  and  receive  more  of  the  same 
kind  as  interest.  There  is  just  the  practical  point  where  our  new  politi 
cal  physiology  fails.  As  *  Art-emus  Ward'  would  say,  '  its  forte  is  not  in 
borrowing,  but  in  paying,'  and  we  have  got  to  make  it  work  both  ways. 
It  is  all  nonsense  to  say  that  while  we  pay  out  Treasury  notes  from  neces 
sity  in  some  cases,  we  will  forbear  to  borrow  money,  without  which  our 
credit  must  go  down  entirely,  because  it  will  necessitate  the  payment  of 
interest  in  coin,  and  thus  conflict  with  our  theory ;  that  because  we  pay 
ourselves  and  our  soldiers  and  everybody  else  with  whom  we  are  under 
contract,  in  paper,  we  will  stop  paying  even  them  rather  than  to  continue 
the  ability  to  do  so  by  borrowing  money  and  stipulating  in  advance  to 
pay  the  interest  in  a  different  commodity.  The  inconsistency  consists  in 
not  considering  that  we  must  first  get  the  principal  before  we  put  on  airs 
about  the  manner  in  which  we  will  pay  the  interest,  in  which  transaction 
the  lender  as  well  as  the  borrower  is  usually  consulted.  The  Committee 
of  Ways  and  Means  are  talking  about  paying,  whereas  the  problem  is 
how  to  borrow. 

Nor  does  the  agreement  to  pay  interest  in  coin  tend  in  the  least  to 
depreciate  the  value  of  the  notes.  The  very  necessity  for  this  agreement 
arises  from  the  fact  of  the  pre-existing  differences  in  value  between  coin 
and  paper.  It  does  not  create  the  inequality.  It  recognizes  an  existing 
fact,  and  applying  legislation  practically  to  that  fact,  enhances  the  value 
of  the  paper,  by  allowing  its  conversion  into  a  permanent  loan,  the  prin 
cipal  and  interest  of  which  are  to  be  paid  in  money ;  and  instead  of  depre 
ciating  the  paper,  checks  depreciation  by  reason  of  this  very  convertibility, 
and  presents  the  only  possible  mode,  that  I  can  conceive  of,  by  which 
serious  depreciation  can  be  prevented  and  the  funding  process  kept  in 
operation.  In  fact,  this  very  difference  between  the  intrinsic  values  of 
notes  and  coin,  thus  recognized  and  embodied  in  our  legislation,  tends  to 
produce  the  very  object  desired — the  funding  of  the  public  debt.  If  cap 
ital  will  seek  Treasury  notes  at  par,  for  the  purpose  of  investment  in 
bonds,  with  the  interest  payable  in  notes,  how  much  more  readily  will  it 
seek  these  same  notes,  at  a  slight  depreciation,  for  the  purpose  of  such 
investment,  with  the  interest  to  be  paid  in  gold ;  and  the  very  demand 
for  this  purpose,  while  it  prevents  serious  depreciation,  is  induced  by  the 
very  depreciation  inherent  in  the  character  of  the  paper  which  it  contin 
ually  checks.  It  produces  a  self-adjusting  funding  access,  based  upon 
things  as  they  exist  in  the  commercial  world,  by  which  the  disparity 
between  the  value  of  the  two  currencies  ceases  to  be  an  element  of  dis 
cord,  and  becomes,  during  the  temporary  period  in  which  the  funding 
process  is  going  on,  an  element  of  good.  In  this  manner,  and  through 
the  happy  instrumentality  which  may  in  this  way  be  exerted  by  these 
notes,  imperceptibly,  and  through  the  ordinary  channels  of  financial 
operations,  the  whole  process  of  funding  the  public  debt  will  be  accom 
plished.  *  *  * 


135 

One  thing  further  is  evident.  If  the  debt  can  be  funded  under  the  pro 
visions  of  the  House  bill,  it  certainly  can  under  the  Senate  amendments. 
The  Treasury  has  prided  itself  on  its  ability  to  obtain  money  at  the  rate 
proposed  by  the  latter  in  more  prosperous  times.  If  it  was  satisfactory 
then,  it  should  be  still  more  satisfactory  now.  In  this  work  we  cannot 
afford  to  fail.  The  part  of  wisdom  is,  then,  to  accept  the  greater  safety. 
When  paper  shall  have  taken  the  place  of  coin,  and  the  latter,  true  to  its 
instincts,  shall  have  taken  wings  and  flown  away— it  cannot  be  whistled 
back.  It  is  idle  to  argue  that  two  representatives  of  value  of  equal  nomi 
nal  amount,  but  intrinsically  unequal,  will  stay  together  and  consent  to 
become  convertible.  The  more  valuable  always  abandons  the  field. 

One  fact  more  must  not  be  overlooked  in  considering  this  matter— that 
the  security  remains  the  same  in  all  cases,  namely :  the  faith  of  the  Gov 
ernment.  Xo  inducement  is  offered  by  the  House  to  fund  these  notes  in 
the  nature  of  the  new  security.  The  credit  of  the  Government  is  alike 
bound  for  the  payment  of  both  classes  of  indebtedness  ultimately  in  gold.  Each 
derives  its  entire  value  from  that.  The  only  advantage  that  can  be  then 
offered  in  funding  is  the  mere  convenience  in  the  form  of  the  security, 
and  the  payment  of  interest  in  a  commodity  similar  to  that  which  the 
principal  represents. 

Xow,  I  do  not  know  by  what  class  of  soldiers  my  colleague  [Mr. 
Spaulding,]  may  be  represented  in  the  field,  but  I  do  know  the  character 
of  the  two  thousand  soldiers  from  my  own  county,  and  of  the  four  thous 
and  soldiers  in  the  field  from  my  congressional  district,  and  I  know  that 
their  present  condition  as  soldiers  is  purely  ephemeral.  Their  normal 
condition  is  that  of  citizens,  and  as  such  I  represent  them  here ;  and  they 
will  appreciate  at  what  it  is  worth  the  appeal  of  my  colleague  in  their 
behalf  as  a  class,  as  soldiers,  in  distinction  from  their  character  as  Ameri 
can  citizens.  * 

I  believe  I  have  never  failed  to  sustain,  whether  it  be  to  my  credit  or 
otherwise,  any  recommendation  backed  by  a  majority  of  the  Committee  of 
Ways  and  Means  of  this  House.  As  amended  by  the  Senate  in  this 
respect,  I  will  cheerfully  support  this  bill.  In  its  original  form  I  could 
not,  though  it  has  been  unpleasant  to  diverge  from  so  large  a  proportion 
of  my  political  associates.  It  were  easier  to  have  followed  in  the  wake  of 
inclination,  and  covered  myself  from  criticism  with  the  mantle  of  necessity. 
I  have  preferred  to  walk  the  plank  of  duty,  trusting  to  time  and  practical 
results  for  the  vindication  of  its  policy." 

SPEECH    OF    MR.     CALVERT. 

Mr.  CALVERT,  of  Maryland,  advocated  the  payment  of  interest 
in  coin.  He  said : 

"Let  me  tell  the  gentleman  from  N"ew  York,  [Mr.  Spaulding,]  that  it  is 
useless  to  talk  about  the  injustice  of  paying  brokers  in  one  currency  and 
other  people  another.  When  you  want  to  borrow  money  you  must  go  to 
the  brokers  to  borrow  it.  Farmers  and  others  may  be  induced  by  the 
brokers  to  invest  their  money  in  your  bonds ;  but  they  will  not  do  it  with 
out  the  advice  of  the  brokers  or  agents  with  whom  they  are  in  the  habit  of 
counseling,  and  therefore  it  is  the  broker  at  last  who  holds  in  his  hands 
your  credit,  and  it  is  useless  for  gentlemen  of  this  House  to  talk  about  a 
proposition  to  put  down  the  brokers  wrho  are  constantly  dealing  in  these 
notes.  He  contended  that  the  amendment  of  the  Senate  would  benefit  the 


136 

credit  of  the  Government  more  than  anything;  else  that  could  be  done. 
People  would  not  loan  money  to  be  payable  in  paper,  because,  although 
you  make  paper  a  legal  tender  by  legislation,  it  will  not  be  so  in  fact— the 
question  has  yet  to  be  tried  before  the  State  Court,  as  well  as  before  the 
United  States  Court.  The  only  way  in  which  you  can  possibly  have  any 
notes  funded  is  by  paying  the  interest  in  coin.  Then  if  the  notes  fall 
below  par  they  will  be  immediately  funded." 

SPEECH    OF    MR.     MORRILL. 

Mr.  MORRTLL,  of  Vermont— "Our  whole  difficulty  in  this  matter,  it 
appears  to  me,  arises  from  our  departure  from  sound  principles  in  the 
first  place.  It  appears  that  the  House  and  the  Senate  have  both  decided 
that  they  will  issue  paper  and  make  it  a  legal  tender.  I  deeply  deplore 
the  fact  as  a  blot  on  our  national  history  that  cannot  be  effaced;  but  as  I 
do  not  now  see  it  probable  that  any  other  result  will  be  reached,  my  only 
purpose  and  desire  is  to  perfect  and  pass  the  best  possible  bill  to  be 
obtained. 

I  believe  the  Senate  amendments  are,  on  the  whole,  a  great  improve 
ment  upon  the  bill  as  it  passed  the  House.  I  could  wish  that  we  might, 
even  at  this  hour,  slaughter  both  the  original  bill  and  the  Senate's  amend 
ments,  and  then  mature  such  financial  measures  as  would  preserve  a 
sound  specie-paying  basis;  but  having  no  hope  of  that  now,  I  trust  we 
may  adopt  the  Senate  amendments,  which  will,  in  some  degree  at  least, 
mitigate  the  evils  to  be  apprehended  from  the  bill  as  it  left  this  House. 

Now,  the  gentleman  from  New  York  (Mr.  Spanieling)  talks  as  though 
it  would  be  an  abandonment  of  the  honor  and  good  faith  of  the  Govern 
ment  to  pay  the  soldiers  in  any  different  species  of  money  from  that 
which  we  pay  our  public  creditors.  I  recollect  to  have  read  that  Frederick 
the  Great,  upon  a  certain  occasion,  directed  his  minister,  when  he  was 
about  to  seize  upon  some  province  of  one  of  his  neighbors,  to  draw  up  a 
proclamation  justifying  the  measure  to  the  world;  and  his  minister  drew 
it  up,  commencing,  'In  the  name  of  God.'  Said  Frederick,  'strike  out  all 
about  God,  and  say  that  I  did  it.'  Now,  I  recommend  to  the  gentleman 
from  New  York,  when  he  is  talking  about  this  subject  of  compelling  the 
public  and  private  creditors  to  take  paper  money  for  all  debts  heretofore 
or  hereafter  contracted,  to  omit  all  mention  of  'honor  and  good  faith.' 

But  what  is  the  fact  in  reference  to  this  matter  of  paying  off  the  soldiers 
in  any  different  money  ?  Why,  the  fact  is  that  AVC  are  going  to  pay  them 
in  paper,  according  to  this  bill.  Now,  if  these  soldiers  were  debtors,  and 
owed  a  grocer  at  home  or  here,  and  could  make  a  tender  of  this  paper,  it 
might  then  indeed  be  of  some  service;  but  how  are  you  to  compel  the 
grocer,  or  any  man  who  has  anything  to  sell  upon  which  these  soldiers  or 
their  families  subsist,  to  take  this  paper  at  anything  more  than  its  market 
value  ?  Of  course,  if  coin  is  worth  more  than  paper,  they  have  to  pay  to 
that  extent  more  than  they  would  pay  if  they  had  coin ;  and  I  am  in  favor 
of  keeping  our  promises  equal  to  coin.  In  my  judgment,  if  we  pay  the 
interest  on  the  public  debt  in  specie,  it  will  have  a  tendency  to  keep  up 
the  credit  of  the  country,  and  there  will  be  less  depreciation  upon  these 
notes  than  there  otherwise  would  be. 

But,  Mr.  Chairman,  the  great  object  is  to  fund  some  portion  of  the  public 
debt.  Now,  it  is  perfectly  apparent,  not  only  from  the  statement  of  the 
gentleman  from  New  York  (Mr.  Spaulding),  but  from  the  knowledge  all 


137 

have  of  the  subject,  that  our  wants  are  large,  and  that  we 
pelled  to  issue  our  bonds  or  notes,  or  paper  of  some  kind,  to  a 
hereafter.  Now  it  is  proposed  to  issue  twice,  thrice  or 
amount  of  this  legal  tender  paper  before  this  session  of  Congress 
Within  sixty  days  we  must  have  at  least  twice  the  amount  of  notes  w 
is  proposed  now;  and  unless  they  can  be  funded  into  debts  due  at  soi 
future  time,  from  necessity,  as  we  shall  again  be  told,  we  shall  have  to 
repeat  the  close  we  are  now  offering  to  the  public.  Anybody  may  sec  that 
while  it  might  be  possible  for  this  country  to  endure  $150,000,000  of  addi 
tional  currency,  even  if  it  did  unhinge  all  commercial  transactions,  that  it 
would  be  utterly  impossible  that  we  could  absorb  twice  or  thrice  that 
amount  without  a  vast  expansion  of  the  whole  monetary  system  of  the 
country— turning  even  sober  and  industrious  citizens  into  the  wildest  of 
speculators.  ******** 

But,  Mr.  Chairman,  I  believe  that  if  we  could  stand  up  here  in  the  vigor 
of  a  nation  not  yet  taxed  a  single  dollar  for  the  cost  of  this  war,  and 
mature  a  proper  policy  by  which  we  can  negotiate  a  loan  standing  on  the 
credit  of  the  country,  standing  on  the  proposed  taxation  of  the  country, 
standing  on  our  hitherto  untarnished  honor,  that  there  could  be  no  need 
whatever  of  a  resort  to  such  a  desperate  scheme  as  the  one  now  under  con 
sideration.  I  hope,  therefore,  that  we  shall  adopt  the  amendment  of  the 
Senate.  I  wish  that  we  might  go  much  further,  but  that  at  least  is  better 
than  a  measure  whose  symmetry  is  only  measured  by  its  exclusively  paper 
character." 

SPEECH    OF    MPt.     DUNN. 

Mr.  DUNN,  of  Indiana,  spoke  as  follows : 

"Mr.  Chairman — when  this  bill  was  under  consideration  in  the  House, 
(in  Committee  of  the  Whole, )  a  direct  vote  was  taken  upon  the  proposition 
to  pay  the  interest  on  the  bonds  in  coin,  and  the  Committee  sustained  that 
proposition  by  a  very  decided  vote.  I  do  not  quite  understand  by  what 
legerdemain  the  bill  went  to  the  Senate  in  a  different  form.  I  voted  then 
that  the  interest  shoulcVbe  paid  in  coin,  and  I  shall  vote  so  now,  notwith 
standing  the  arguments  employed  here  to  induce  us  to  vote  differently. 

The  principal  argument  urged  against  the  Senate  amendment  is  that  it 
provides  for  paying  our  creditors  in  different  ways,  and  an  appeal  is  made 
to  the  patriotism  of  the  House  to  know  if  we  are  willing  to  pay  different 
kinds  of  money  for  our  interest  from  that  with  which  we  pay  our  soldiers. 
Nowr,  I  shall  vote  for  this  proposition  with  the  direct  view  and  object  of 
making  the  paper  we  offer  to  the  soldier  as  good  as  possible.  I  believe 
that  it  is  impossible  to  pay  them  in  coin,  or  I  would  vote  for  that.  It  is 
necessary  to  make  our  notes  as  good  as  possible,  and  if  there  is  any  equiv 
alent  for  coin,  let  us  approach  that  point  as  nearly  as  possible.  If  we 
cannot  remove  the  cloud  of  debt,  let  us,  at  least,  give  it  a  golden  lining. 
One  mode  of  sustaining  the  credit  of  the  notes  is  to  have  them  converted 
into  bonds;  and  in  order  to  make  those  bonds  acceptable  to  those  who 
have  money  to  lend,  we  must  make  the  interest  payable  in  coin.  We 
must  try  to  induce  capitalists  to  lend  us  money ;  for  we  have  no  mode  of 
compelling  them  to  do  so.  The  gentleman  from  Vermont,  [Mr.  Merrill,] 
who  has  just  taken  his  seat,  said  that  the  West  expected  some  advantages 
from  making  Treasury  notes  a  legal  tender.  The  members  from  the  West, 
generally,  who  voted  for  making  the  notes  a  legal  tender,  did  so  because 
we  believed  it  to  be  a  governmental  necessity.  We  wanted  a  bridge  to 


138 

carry  us  over  the  morass.  We  make  it  of  trestle-work,  a  temporary  work, 
to  serve  only  until  the  ground  hardens.  We  do  not  believe  this  war  is  to  be  of 
long  continuance.  We  do  not  believe  the  necessity  of  the  legal  tender  clause  will 
long  exist.  I  think  that  those  who  wrere  despondent  ten  days  ago  have 
now  great  reason  to  rejoice.  The  rapid  succession  of  Union  victories  has 
tilled  every  loyal  heart  with  joy,  and  I  do  not  doubt  but  that  we  shall  soon 
be  relieved  from  our  pecuniary  difficulties." 

MR,   ENGLISH'S  SPEECH. 

Mr.  ENGLISH,  of  Connecticut,  spoke  in  favor  of  paying  the 
interest  in  coin. 

He  concurred  with  Mr.  Pendletonon  the  constitutional  question, 
and  considered  it  settled  by  his  argument  that  it  was  not  consti 
tutional  to  make  these  notes  a  legal  tender.  He  also  argued  at 
considerable  length  that  the  measure  was  not  necessary  at  this 
time.  He  was  in  favor  of  ample  taxation,  and  that  the  States 
should  be  allowed  to  collect  the  taxes  and  pay  over  the  money  to 
the  United  States.  He  wanted  no  Government  tax  collectors. 

On  the  pending  amendments  he  said: 

"In  order  to  make  these  bonds  valuable  to  those  who  have  money  to 
invest,  we  must  adopt  the  amendment  of  the  Senate  providing  that  the 
interest  shall  be  paid  in  gold  and  silver.  When  it  is  ascertained, that  the 
interest  is  to  be  paid  in  gold  and  silver,  then  the  bonds  will  be  sought  for 
investment.  If  you  issue  Treasury  notes,  and  if  these  Treasury  notes  go 
into  the  market  and  depreciate — as  I  think  they  will  not — what  will  be  the 
effect?  The  effect  will  be  that,  just  in  proportion  as  the  Treasury  notes 
depreciate,  in  the  same  proportion  will  the  interest  payable  on  bonds  be 
diminished.  These  Treasury  notes  answer  very  well  as  a  means  of  circu 
lation,  provided  the  amount  of  the  issue  shall  not  exceed  that  provided  for 
in  this  bill.  My  opinion  is  that  these  Treasury  notes  may  answer  a  very 
good  purpose ;  but  the  moment  their  volume  is  swollen  beyond  that,  so 
soon  will  they  depreciate. 

I  trust  that  the  amendment  of  the  Senate  will  be  concurred  in  by  this 
House.  In  my  judgment,  it  is  the  very  best  thing  that  we  can  do  under 
the  circumstances.  I  voted  for  the  issuing  of  these  Treasury  notes,  but 
against  the  'legal  tender'  clause.  Otherwise,  I  was  in  favor  of  the  meas 
ure;  but  the  judgment  of  the  House  was  against  me  on  that  point.  I 
think  that  now  the  best  thing  the  House  can  do  is  to  concur  in  the  Senate 
amendment;  and  I  trust  that  it  will  be  concurred  in.'' 

SPEECH    OF    MR.     TIKE. 

Mr.  PIKE,  of  Maine,  spoke  as  follows: 

"Mr.  Chairman— with  all  due  deference  to  gentlemen  who  differ  with 
me  on  this  subject,  it  does  seem  to  me  that  this  matter  of  paying  interest 
in  coin  is  a  controversy  about  goat's  wool.  The  interest  Avill  be  paid  in 
coin  in  any  event.  The  recent  victories  of  our  armies  have  changed  the 
whole  matter.  (Just  heard  of  the  capture  of  Fort  Donelson  and  the  move 
ment  on  Xashville.)  We  have  now  to  return  to  a  normal  condition  of 
currency.  *  •*.* 


139 

"I  not  only  assent  most  cheerfully  to  the  proposition  to  pay  the  interest 
in  coin,  but  I  also  assent  to  the  cognate  proposition  to  sell  these  bonds  at 
the  highest  price  we  can  get  for  them.  AVe  are  returning  now  to  a  solid 
basis.  I  hail  the  cause  of  the  rotnrn  as  well  as  the  return  itself.  Let  us 
sell  our  bonds  to  pay  the  creditors  whom  we  are  under  contract  to  pay. 
We  never  can  have  a  better  time  for  doing  so  than  now,  when  an  efferves 
cence  of  delight  is  felt  all  over  the  country,  because  of  the  victories 
achieved  by  our  armies.  It  is  felt  everywhere  now  that  we  not  only  have 
a  Government,  but  a  country  on  which  to  base  this  issue.  Therefore,  I 
say,  let  us  now  sell  these  bonds.  Let  us  realize  as  much  money  from  them 
as  we  can.  Let  us  provide  to  pay  the  interest  in  coin,  and  let  us  pay  the 
public  creditors." 

SPEECH    OF    MR.     DIVEX. 

Mr.  DIVEX,  of  New  York,  spoke  as  follows : 

"  It  strikes  me,  Mr.  Chairman,  that  the  fallacy  of  all  the  arguments  in 
favor  of  this  amendment  consists  in  the  fact  that  the  amendment  fails  to 
meet  the  evil.  It  is  not  proposed  to  go  back  and  remedy  the  great 
national  wrong,  national  dishonor,  and  inconsistency  of  the  step  that  has 
been  taken  by  declaring  that  these  notes  shall  be  a  legal  tender.  If  this 
House  is  determined  to  adhere  to  that,  if — as  the  gentleman  from  Vermont 
has  said — the  child  is  dead,  if  the  national  credit  is  gone,  if  we  are  ready 
to  assume  the  humiliating  attitude  that  national  credit  and  honor  are 
dead,  then  the  argument  of  the  gentleman  from  New  York  (Mr.  Spaul- 
ding)  is  sound. 

The  same  plea  of  necessity  which  is  resorted  to  in  support  of  the  legal 
tender  clause,  will  require  us  to  resort  to  every  effort  to  do  away  with  all  dis 
tinction  between  this  paper  money  and  coin.  The  requiring  the  payment  of 
interest  in  coin  will  have  a  tendency  to  make  such  distinction.  It  will  have  that 
eifect,  and  all  that  we  can  do  will  not  help  it.  Let  me  make  one  appeal 
to  members.  It  is  not  yet  too  late  to  retrieve  the  error.  We  have  not  yet 
declared  that  we  will  compel  men  to  take  those  promises  to  pay,  and  to 
treat  them  as  substance.  The  wray  to  recede  from  that  dangerous  propo 
sition  is  before  us. 

The  times  are  auspicious.  One  good  reason  urged  in  favor  of  that  policy 
was  that  the  people  were  discouraged  from  the  want  of  success  in  our 
army.  We  have  now  the  encouragement  of  success.  Only  let  the 
moneyed  men  of  the  country  believe  that  the  Government  is  to  succeed 
in  putting  down  this  rebellion,  and  we  will  not  have  to  plead  for  credit. 
It  is  not  gold  and  silver  that  we  want.  It  is  not  things  that  are  to  be 
taken  for  gold  and  silver  that  we  want.  It  is  credit ;  it  is  confidence  on 
the  part  of  men  who  have  money  to  lend,  and  who  can  lend  it  to  the  Gov 
ernment  with  the  assurance  that  it  will  be  returned  to  them.  That  is  all 
that  is  wanted.  And  now,  in  view  of  the  brilliant  prospect  before  us  of  a 
speedy  termination  of  the  rebellion,  and  in  view  of  the  immense  resources 
of  the  Government,  in  Heaven's  name,  let  us  leave  no  national  dishonor, 
to  forever  remain  a  stain  upon  the  country.  We  will  do  that,  if  we  do  this 
great  wrong.  I  appeal  to  the  House,  in  the  name  of  honor  and  justice,  to 
retrace  the  step  it  has  taken,  and  to  save  the  Union  from  the  loss  that  will 
alflict  it  by  the  passage  of  this  law." 

Mr.  WIXDOM,  of  Minnesota,  objected  to  the  proceeds  of  the  public 
ids  being  pledged  to  pay  interest  or  principal  on  the  bonds,  as 


140 

proposed  by  the  Senate,  for  the  reason  that  it  would  tend  to 
defeat  the  Homestead  Law.  This  provision  was  afterwards  struck 
out  in  the  Conference  Committee. 

On  the  6th  amendment  of  the  Senate,  providing  that  these 
Treasury  notes  should  be  received  for  all  claims  and  demands 
against  the  United  States  of  every  kind  whatsoever,  '  except  for 
interest  on  bonds  and  notes,  which  shall  be  paid  in  coin ^  Mr.  Pendletoii 
moved  an  amendment  to  the  effect  *  that  the  officers,  soldiers, 
seamen  and  mariners  engaged  in  the  military  service  of  the 
United  States,'  should  also  be  paid  in  coin.  Being  opposed  to 
the  whole  legal  tender  principle,  he  offered  it  to  meet  the  objec 
tion  of  the  gentleman  from  New  York,  [Mr.  Spaulding,]  in  refer 
ence  to  our  unjust  discrimination  against  soldiers  and  others, 
He  said: 

"I  am  not  in  favor  of  that  discrimination,  but  am  in  favor  of  paying  the 
officers  and  soldiers  in  the  military  and  naval  service  of  the  Government 
in  the  legal  coin  of  the  country." 

The  amendment  was  not  agreed  to. 

The  amendments  of  the  Senate  having  been  acted  upon  in  Com 
mittee  of  the  Whole,  Mr.  Stevens  moved  that  the  Committee  rise 
and  report  the  bill  and  amendments  to  the  House,  which  was 
agreed  to.  The  bill  and  amendments  were  accordingly  reported 
to  the  House. 

On  the  20th,  the  House  resumed  the  consideration  of  the  Senate 
amendments. 

Mr.  STEVENS  was  entitled  to  one  hour  in  closing  the  debate. 
He  gave  a  part  of  this  time  to  Mr.  Hooper,  of  Massachusetts, 

MR.   HOOPER'S  SPEECH. 
Mr.  HOOPER,  of  Massachusetts,  spoke  as  follows : 

"Mr.  SPEAKER — with  the  present  large  expenditures  of  the  Govern 
ment,  and  while  the  banks  throughout  the  country  are  acting  under  a 
suspension  of  specie  payments,  it  is  an  absurdity  to  insist  on  the  strict 
enforcement  of  the  existing  laws,  which  require  all  Government  receipts 
and  payments  to  be  made  in  coin.  It  is  absurd,  in  my  opinion,  because  it 
is  impossible ;  and  it  is  also  absurd  because  it  is  useless.  What  private 
corporations  or  individuals  in  this  country  receive  and  pay  coin  in  the 
conduct  of  their  business?  There  are  none.  Nearly  all  the  ordinary 
receipts  and  payments  throughout  the  country  are  made  in  bank  notes, 
bank  checks,  or  credit  in  some  other  form;  and  coin  is  only  required 
occasionally  for  a  very  small  per  cent,  of  those  receipts  and  payments, 
which  in  amount,  extend,  in  the  course  of  a  single  year,  to  thousands  of 
millions  of  dollars. 

The  object  of  this  Treasury  note  bill  is  to  furnish  a  substantial  and 


141 

uniform  currency  that  will  aid  the  Government,  and  enable  it  to  receive 
its  dues  and  make  its  payments,  like  all  others,  with  credits.  This  bill 
declares  that,  for  all  dues  to  the  Government  and  for  all  payments  by  the 
Government,  these  notes  shall  be  received  'the  same  as  coin.'  One  way 
to  make  them  'the  same  as  coin '  would  be  to'  make  them  at  all  times  con 
vertible  into  coin.  Another  is  to  use  them,  so  far  as  possible,  for  all  the 
purposes  for  which  coin  is  used ;  and  in  this  latter  mode  their  value  will 
be  the  same  as  coin,  unless  the  amount  that  is  issued  exceeds  the  amount 
needed  for  such  uses. 

At  the  end  of  twelve  months  from  this  time  the  receipts  of  the  Govern 
ment  and  the  payments  by  the  Government,  amounting  to  many  hundred 
millions  of  dollars,  will  be  found  to  be  nearly  equal;  that  is,  the  Govern 
ment  during  that  time  will  have  received  about  the  same  amount  that  it 
will  have  paid ;  and  if  these  '  Government  notes  '  are,  in  part,  paid  out  by 
the  Government,  as  it  is  proposed  they  shall  be,  in  anticipation  of  the 
receipts  for  taxes  and  loans,  they  must  all  come  back  again  in  the  course 
of  the  year,  when  those  taxes  and  loans  are  paid  for.  The  people  may  lind 
a  portion  of  these  notes  more  convenient  for  other  uses,  and  may,  there 
fore,  prefer  to  make  their  payments  to  the  Government  partly  in  coin. 
Unless,  therefore,  the  Government  is  to  be  broken  down,  by  the  refusal  to 
furnish  the  means  in  the  form  of  taxes  and  loans  to  carry  it  on,  these  notes 
cannot  depreciate  to  any  extent,  because  they  will  be  needed,  and  proba 
bly  a  large  amount  of  coin  in  addition,  to  pay  into  the  Treasury  for  the 
loans  and  taxes;  they  will  be  received  by  the  Government  the  same  as 
coin,  and  therefore  must  be  for  this  purpose,  and  all  others,  the  equivalent 
of  coin,  unless  they  are  imprudently  issued  in  excess  of  the  requirements 
for  such  purposes. 

I  am  opposed  to  this  amendment  of  the  Senate  which  requires  the  inter 
est  on  Government  notes  and  bonds  to  be  absolutely  paid  in  coin,  because 
its  effect  will  be  to  depreciate  these  notes  as  compared  with  coin,  by  declaring  them 
in  advance  to  be  so  depreciated.  It  creates  a  necessit y  for  the  Government  to 
obtain  a  large  amount  of  coin  by  purchase,  if  it  is  not  received  in  payment 
of  taxes  and  loans,  which  hold  out  an  inducement  to  speculate  on  the 
necessity  of  the  Government,  by  collecting  and  hoarding  the  coin  against 
the  time  that  will  be  required  by  the  Government  to  pay  its  interest; 
and  because  it  is  an  unnecessary  inconvenience  to  require  the  whole 
amount  of  the  interest  to  be  paid  in  coin,  when  only  the  small  amount  is 
necessary  that  is  to  be  remitted  to  foreign  holders  of  bonds,  which  could 
easily  be  obtained  at  small  cost,  if  the  effect  of  the  issue  of  the  Govern 
ment  notes  should  be  what  the  friends  of  this  bill  expect. 

If  the  opponents  of  this  bill  have  proved  anything,  they  have  proved  too 
much  in  reference  to  the  question  now  before  the  House,  which  is  to  make 
a  distinction  in  favor  of  the  holders  of  Government  securities,  and  pay 
what  may  be  due  to  them  in  coined  money,  while  all  other  creditors  of 
the  Government  shall  be  paid  in  what  they  have  denounced  to  the  country 
from  the  high  places  they  occupy  here,  as  the  meanest  paper  trash." 

CLOSING    DEBATE MR.     STEVENS'    SPEECH. 

Mr.  STEVENS,  of  Pennsylvania,  spoke  as  follows : 

"Mr.  SPEAKER— I  have  a  very  few  words  to  say.  I  approach  the  sub 
ject  with  more  depression  of  spirits  than  I  ever  before  approached  any 
question.  No  personal  motive  or  feeling  influences  me.  I  hope  not,  at 
least.  I  have  a  melancholy  foreboding  that  we  are  about  to  consummate 


142 

a  cunningly  devised  scheme,  which  will  carry  great  injury  and  great  loss 
to  all  classes  of  the  people  throughout  this  Union,  except  one.  With  my 
colleague,  I  believe  that  no  act  of  legislation  of  this  Government  was  ever 
hailed  with  as  much  delight  throughout  the  whole  length  and  breadth  of 
this  Union,  by  every  class  Of  people,  without  any  exception,  as  the  bill 
which  we  passed  and  sent  to  the  Senate.  Congratulations  from  all  classes 
— merchants,  traders,  manufacturers,  mechanics  and  laborers— poured  in 
upon  us  from  all  quarters.  The  Boards  of  Trade  from  Boston,  N~ew  York, 
Philadelphia,  Cincinnati,  Louisville,  St.  Louis,  Chicago  and  Milwaukee, 
approved  its  provisions,  and  urged  its  passage  as  it  was. 

I  have  a  dispatch  from  the  Chamber  of  Commerce  of  Cincinnati,  sent  to 
the  Secretary  of  the  Treasury,  and  by  him  to  me,  urging  the  speedy  pas 
sage  of  the  bill  as  it  passed  the  House.  It  is  true  there  was  a  doleful  sound 
came  up  from  the  caverns  of  bullion  brokers,  and  from  the  saloons  of  the  associated 
banks.  Their  cashiers  and  agents  were  soon  on  the  ground,  and  persuaded 
the  Senate,  with  but  little  deliberation,  to  mangle  and  destroy  what  it  had 
cost  the  House  months  to  digest,  consider  and  pass.  They  fell  upon  the 
bill  in  hot  haste,  and  so  disfigured  and  deformed  it,  that  its  very  father 
would  not  know  it.  [Laughter.]  Instead  of  being  a  beneficent  and  invig 
orating  measure;  it  is  now  positively  mischievous.  It  has  all  the  bad 
qualities  which  its  enemies  charged  on  the  original  bill,  and  none  of  its 
benefits.  It  now  creates  money,  and  by  its  very  terms  declares  it  a  depreciated 
currency.  It  makes  two  classes  of  money— one  for  the  banks  and  brokers,  and 
another  for  the  people.  It  discriminates  between  the  rights  of  different 
classes  of  creditors,  allowing  the  rich  capitalist  to  demand  gold,  and  com 
pelling  the  ordinary  lender  of  money  on  individual  security  to  receive 
notes  which  the  Government  had  purposely  discredited. 

Let  us  examine  the  principal  amendments  separately,  and  see  their 
effect.  The  first  important  one  (being  the  fifth,)  makes  the  notes  issued 
under  the  laws  of  July  17,  a  legal  tender,  equally  with  those  authorized  by 
this  bill.  There  can  be  but  little  wisdom  in  putting  these  two  classes  on  an 
equality.  The  notes  of  July  bear  seven  and  three-tenths  per  cent,  interest, 
and  are  payable  in  three  years.  This  gives  them  a  sufficient  advantage 
over  notes  bearing  no  interest  and  payable  virtually  in  twenty  years 
bonds,  with  six  per  cent,  interest.  Why  give  them  this  additional  advan 
tage?  Simply  because  the  $100,000,000  issued  are  all  held  by  the 
associated  banks,  and  this  is  their  amended  bill.  They  would  displace 
$100,000,000  of  this  money  in  the  circulation,  and  render  it  impossible  to 
use  any  considerable  amount  of  these  United  States  notes  as  a  currency. 
These  notes  have  served  their  purpose.  Why  allow  them  to  block  up  the 
market  against  further  relief  to  the  Government? 

The  banks  took  $50,000,000  of  six  per  cent,  bonds,  and  shaved  the  Gov 
ernment  $5,500,000  on  them,  and  now  ask  to  shave  the  Government  fifteen 
or  twenty  per  cent,  half  yearly ,  to  pay  themselves  the  interest  on  these 
very  bonds.  They  paid  for  the  $50,000,000  in  demand  notes,  not  specie, 
and  now  demand  the  specie  for  them.  Yet  gentlemen  talk  about  our 
making  other  loans  in  these  times.  They  are  crazy  or  sleeping,  one  or  the 
other,  I  do  not  know  which. 

When  this  question  was  discussed  before,  the  distinguished  gentleman 
from  Kentucky  (Mr.  Crittenden)  asked  me  whether  it  was  the  intention 
or  expectation  of  the  House  to  go  on  and  issue  more  than  one  hundred  and 
fifty  millions  of  dollars  of  legal  tender  notes— a  pertinent  question,  which 
I  saw  the  whole  force  of  at  the  time.  I  told  him  that  it  was  my  expecta- 


143 

tion  that  no  more  would  be  issued  by  the 'Government;  that  they  would 
be  received  and  funded  in  the  twenty  year  bonds.-' 

Mr.  LOVEJOY— "I  ask  the  gentleman  from  Pennsylvania  whether  $150,- 
000,000  of  gold  could  not  be  put  into  circulation  as  well  as  $150,000,000  of 
Treasury  notes  ?  " 

Mr.  STEVEXS— "If  this  $150,000,000  would  come  out  of  the  banker's  and 
miser's  hoards ;  but  they  have  suspended  specie  payment,  and  would  not 
give  out  a  dollar.  They  say  pay  us  a  discount,  and  then  when  these  notes 
are  made  a  legal  tender  we  will  be  again  in  the  clutches  of  these  harpies. 
I  do  not  wrant  to  use  hard  names.  I  suppose  these  men  act  from  instinct. 
If  I  were  now  to  answer  the  question  of  the  gentleman  from  Kentucky,  I 
would  not  give  that  answer.  I  do  not  expect  one  dollar  of  the  $150,000,000 
of  legal  tender  notes  ever  to  be  invested  in  the  twenty  years  bonds.  I 
infer  from  the  amendment  that  before  we  adjourn  $150,000,000  will  be 
asked  for,  which  will  never  be  funded  in  those  bonds,  and  so  on,  as  they 
are  needed,  as  no  bonds  will  lie  funded  until  our  circulation  will  become  fright 
fully  inflated.  *  *  *********'* 

But  now  comes  the  main  clause.  All  classes  of  people  shall  take  these 
legal  tender  notes  at  par  for  every  article  of  trade  or  contract,  unless  they 
have  money  enough  to  buy  United  States  bonds,  and  then  they  shall  be 
paid  in  gold.  Who  is  that  favored  class  ?  The  banks  and  brokers,  and 
nobody  else.  They  have  already  $250,000,000  of  State  debt,  and  their  com 
missioners  would  soon  take  all  the  rest  that  might  be  issued. 

But  how  is  this  gold  to  be  raised?  The  duties  and  public  lands  are  to  be  paid 
for  in  United  States  notes,  and  they  or  bonds  are  to  be  put  up  at  auction  to  get 
coin  for  these  very  brokers,  who  would  furnish  the  coin  to  pay  themselves,  by  get- 
ling  twenty  per  cent,  discount  on  the  notes  thus  bought.  *  *  *  * 

I  have  proposed  an  amendment  to  the  Senate  amendment  upon  the  prin 
ciple  of  legitimate  parliamentary  rules,  that  you  may  make  as  palatable  as 
you  can  an  amendment  which  you  do  not  like,  before  the  vote  is  taken 
upon  it.  My  amendment  is  offered  for  the  purpose  of  curing  a  little  the 
evils  and  hardships  of  the  original  amendment  of  the  Senate.  And  though 
it  may  be  adopted,  I  shall  vote  against  the  whole  as  amended.  My 
amendment  is  to  except  from  the  operation  of  the  legal  tender  clause  the 
officers  and  soldiers  of  the  army  and  navy,  and  those  who  supply  them  with  pro- 
visions,  and  thus  put  them  upon  the  same  footing  with  the  Government 
creditors  who  hold  their  bonds.  I  hope  they  will  not  be  thought  less  mer 
itorious  than  the  money-changers.  I  trust  it  will  be  adopted  as  an 
amendment  to  the  Senate  amendment,  so  that  if  this  pernicious  system  is 
to  be  adopted,  if  the  beauty  of  the  original  bill  is  to  be  entirely  impaired, 
those  who  are  fighting  our  battles,  and  the  widows  and  children  of  those 
who  are  lying  in  their  graves  in  every  part  of  the  country,  killed  in 
defense  of  the  Government,  may  be  placed  upon  no  worse  footing  than 
those  who  hold  the  bonds  of  the  Government  and  the  coin  of  the  county." 

At  the  conclusion  of  Mr.  Stevens'  speech  the  House  proceeded 
to  vote  on  the  Senate  amendments,  some  of  which  were  concurred 
in,  and  others  were  disagreed  to. 

The  first  important  division  of  the  House  was  on  the  sixth 
amendment  of  the  Senate,  as  follows : 

"Immediately  after  the  clause  last  quoted,  strike  out  the  words  'and 
for  all  salaries,  debts  and  demands  owing  by  the  United  States  to  individ- 


144 

uals,  corporations  and  associations  within  the  United  States,'  and  insert, 
'and  of  claims  and  demands  against  the  United  States,  of  any  kind  what 
soever,  except  for  interest  upon  bonds  and  notes,  which  shall  be  paid  in  coin.'1 " 

To  this  amendment  Mr.  Stevens  moved  an  amendment  to  insert 
after  the  word  "notes,"  the  following: 

"And  payments  to  be  made  to  officers,  soldiers  and  sailors  in  the  army  and 
navy  of  the  United  States,  and  for  all  suprjlies  purchased  for  the  said  Govern 
ment." 

Mr.  WHITE,  of  Indiana — "I  appeal  to  the  gentleman  from  Pennsylvania 
to  withdraw  that  amendment.  It  was  only  intended  to  illustrate  an 
absurdity,  and  I  hope  he  will  withdraw  it.-' 

Mr.  STEVENS— "  Xo  sir;  I  cannot  withdraw  it." 

Mr.  BINGHAM— "I  demand  the  jreas  and  nays  on  the  amendment  to  the 
amendment." 

The  yeas  and  na}Ts  were  ordered. 

Mr.  BAKER— "I  should  like  to  ask  the  Chairman  of  the  Committee  of 
Ways  and  Means  a  question." 

THE  SPEAKER — "  No  debate  is  in  order  at  this  time." 

The  question  was  taken,  and  it  was  decided  in  the  negative — 
3^eas  67,  miys  72;  as  follows: 

Yeas — Messrs.  Aldrich,  Ancona,  Babbitt,  Joseph  Bailey,  Baker, 
Biddle,  Bingham,  Francis  P.  Blair,  Jacob  B.  Blair,  Samnel  S. 
Blair,  George  H.  Browne,  Buffinton,  Campbell,  Chamberlin,  Clark, 
Cobb,  Davis,  Diven,  Edwards,  Ely,  Fenton,  Fessenden,  Fisher, 
Franchot,  Frank,  Gooch,  Granger,  Hale,  Hanchett,  Harrison, 
Holman,  Hooper,  Johnson,  Julian,  William  Kellogg,  Killinger, 
Lehman,  McPherson,  Marston,  M^-nard,  Mitchell,  Anson  P. 
Morrill,  Noell,  Odell,  Olin,  Perry,  John  H.  Rice,  James  S.  Rol 
lins,  Shanks.  Sherman,  Shiel,  Sloan,  Spaulding,  William  G.  Steele, 
Stevens,  Van  Horn,  Van  Valkenburg,  Verree,  Yoorhees,  Wall, 
Wallace,  Ward,  Albert  S.  White,  Wilson,  Windom,  Woodruff  and 
Worcester — 67. 

Nays — Messrs.  Alley,  Arnold,  Ashley,  Baxter,  Blake,  William 
G.  Brown,  Burnham,  Calvert,  Clements,  Frederick  A.  Conkling, 
Roscoe  Conkling,  Conway,  Cox,  Cravens,  Crittenden,  Dawes, 
Duell,  Dimlap,  Dunn,  Eliot,  English,  Goodwin,  Grider,  Gurley, 
Haight,  Hall,  Harding,  Hickman,  Horton,  Kelley,  Knapp,  Law, 
Leary,  Loomis,  Lovejoy,  McKnight,  Mallory,  May,  Menzies, 
Moorhead,  Justin  S.  Morrill,  Nixon,  Noble,  Norton,  Nugen,  Pat- 
ton,  Timothy  G.  Phelps,  Pike,  Pomeroy,  Alexander  H.  Rice, 
Riddle,  Robinson,  Sargent,  Sedgwick,  Sheffield,  Smith,  John  B. 


145 

Steele,  Stratton,  Benjamin  F.  Thomas, ^Francis  Thomas,  Train, 
Trimble^Trowbridge,  Vallandigham,  Charles  W.  Walton,  E.  P. 
Walton,  Washburne,  Webster,  Wheeler,  Wickliffe  and  Wright— 
72. 

So  the  amendment  of  Mr.  Stevens  to  pay  the  army  and  navy 
in  specie,  the;]same  as  the  bondholders  interest  in  coin,  was  not 
agreed  to. 

The  question  being  upon  agreeing  to  the  sixth  amendment  of 
the  Senate,  to  pay  interest  in  coin  on  bonds  and  notes,  in  which 
the  Committee  of  the  Whole  on  the  state  of  the  Union  recom 
mended  concurrence. 

3Ir.  Roscoe  Conkling  demanded  the  yeas  and  nays. 

The  yeas  and  nays  were  ordered. 

The  question  was  taken;  and  it  was  decided  in  the  affirmative — 
yeas  88,  nays  56;  as  follows: 

Yeas — Messrs.  Ancona,  Arnold,  Ashley,  Baxter,  Beaman,  Bid- 
die,  Jacob  B.  Blair,  George  H.  Browne,  William  G.  Brown,  Burn- 
ham,  Calvert,  Clements,  Cobb,  Frederick  A.  Conkling,  Roscoe 
Conkling,  Corning,  Covocle,  Cox,  Cravens,  Crittenden,  Diven, 
Dunlap,  Dunn,  Eliot,  English,  Goodwin,  Grider,  Guiiey,  Haight, 
Hall,  Harding,  Holman,  Horton,  Johnson,  Kelley,  Knapp,  Law, 
Leary,  Lehman,  Loomis,  Lovejoy,  McKnight,  Mallory,  May, 
Menzies,  Justin  S.  Merrill,  Nixon,  Noble,  Norton,  Nngen,  Odell, 
Patton,  Pendleton,  Perry,  Timothy  G.  Phelps,  Pike,  Pomeroy, 
Price,  Alexander  H.  Rice,  Riddle,  Robinson,  Edward  H.  Rollins, 
James  S.  Rollins,  Sargent,  Sedgwick,  Sheffield,  Sherman,  Shiel, 
Smith,  John  B.  Steele,  William  G.  Steele,  Stratton,  Benjamin  F. 
Thomas,  Francis  Thomas,  Train,  Trimble,  Vallandigham,  Vib- 
bard,  Voorhees,  Charles  W.  Walton,  E.  P.  AValton,  Ward,  Wash- 
burn,  Webster,  Wheeler,  Wickliffe,  Woodruff  and  Wright— 88. 

jfays — Messrs.  Aldrich,  Alley,  Babbitt,  Joseph  Bailey,  Baker, 
Binghain,  Francis  P.  Blair,  Samuel  S.  Blair,  Blake,  Buffinton, 
Campbell,  Chamberlin,  Clark,  Davis,  Dawes,  Duell,  Edwards, 
Ely,  Fenton,  Fessenden,  Fisher,  Franchot,  Frank,  Granger,  Hale, 
Hanchett,  Harrison,  Hickman,  Hooper,  Julian,  William  Kellogg, 
Killinger,  Lansing,  McPherson,  Marston,  [Maynard,  Moorhead, 
Alison  P.  Morrill,  Noell,  Olin,  John  H.  Rice,  Shanks,  Sloan, 
Spaulding,.., Stevens,  Trowbridge,  Van  Horn,  Van  Valkenburgh, 
Verree,  Wall,  Wallace,  Whaley,  Albert  S.  AVhite,  Wilson,  Win- 
dom  and  Worcester — 56. 


146 

So  the  amendment  of  the  Senate  to  pay  the  interest  on  bonds  and 
notes  in  coin  was  adopted. 

Fifteenth  amendment. 

In  line  thirteen,  second  section,  after  the  word  'time,'  insert, 
'at  the  market  value  thereof;'  so  that  the  clause  will  read: 

"And  the  Secretary  of  the  Treasury  may  dispose  of  such  bonds  at  any 
time,  at  the  market  value  thereof.'1'' 

The  Committee  of  the  Whole  on  the  state  of  the  Union  recom 
mended  non-concurrence. 

Mr.  Horton  asked  for  a  division. 

Mr.  Washburne  demanded  tellers. 

Tellers  were  appointed. 

Mr.  Chambciiin  called  for  the  yeas  and  nays. 

The  yeas  and  nays  were  ordered. 

The  question  was  taken;  and  it  was  decided  in  the  affirmative — 
yeas  72,  nays  66;  as  follows: 

Yeas — Messrs.  Ancona,  Goldsmith  F.  Bailey,  Baxter,  Beaman, 
Biddle,  George  II.  Browne,  William  G.  Brown,  Calvert,  Clark, 
Cobb,  Frederick  A.  Conkling,  Roscoe  Conkling,  Conway,  Covode, 
Cravens,  Crittenden,  Cutler,  Dunlap,  Dunn,  Eliot,  English,  Good 
win,  Grider,  Hall,  Harding,  Holman,  Horton,  Johnson,  Kelley, 
Knapp,  Law,  Leary,  Lovejoy,  McKnight,  Menzies,  Justin  S.  Mor- 
rill,  Nixon,  Noble,  Norton,  Nugen,  Odell,  Patton,  Pendleton, 
Perry,  Pike,  Pomeroy,  Porter,  Alexander  H.  Kice,  Eiddle,  Rob- 
inson,  Edward  H.  Rollins,  James  S.  Rollins,  Sargent,  Sedgwick, 
Sheffield,  Shiel,  Smith,  William  G.  Steele,  Stratton,  Benjamin  F. 
Thomas,  Francis  Thomas,  Train,  Trimble,  Verree,  Vibbard,  Voor- 
hees,  Charles  W.  Walton,  E.  P.  Walton,  Washburne,  Wheeler, 
Woodruff  and  Wright— 72. 

Nays — Messrs.  Aldrich,  Alley,  Ashley,  Babbitt,  Joseph  Bailey, 
Baker,  Bingham,  Francis  P.  Blair,  Jacob  B.  Blair,  Samuel  S. 
Blair,  Blake,  Buffinton,  Campbell,  Chamberlin,  Clements,  Cox, 
Davis,  Dawes,  Diven,  Edgarton,  Edwards,  Ely,  Fenton,  Fessen- 
den,  Fisher,  Franc  hot,  Frank,  Granger,  Haight,  Hale,  Hanchett, 
Harrison,  Hickman,  Hooper,  Hutchins,  Julian,  Killinger,  Lansing, 
Lehman,  Loomis,  McPherson,  Marston,  Maynard,  Moorhead, 
Anson  P.  Morrill,  Noell,  Olin,  Potter,  John  H.  Rice,  Shanks, 
Sherman,  Sloan,  Spaulding,  John  B.  Steele,  Stevens,  Trowbridge, 
Vallandigham,  Van  Horn,  Van  Valkenburgh,  Wall,  Wallace, 
Albert  S.  White,  Wickliffe,  Wilson,  Windom  and  Worcester — 66. 

So  the  amendment  was  concurred  in. 


U7 

Mr.  HOOPER— "I  consider  the  adoption  of  the  fifteenth  amendment  of 
the  Senate,  which  authorizes  the  Treasurer  to  sell  the  bonds  at  the  market 
price,  as  an  invitation  to  the  public  to  depreciate  their  value,  and  so 
entirely  contrary  to  the  principle  of  the  bill,  that  I  move  to  lay  the  bill, 
with  the  amendments,  on  the  table." 

Mr.  TTASIIBURNE— uThe  bill  is  not  before  the  House." 

The  SPEAKER— "  A  motion  to  lay  a  single  amendment  on  the  table  car 
ries  the  bill  with  it." 

Mr.  HOOPER — '•!  move  to  lay  this  amendment  on  the  table  ;  and  demand 
the  yeas  and  nays  on  that  motion." 

The  yeas  and  nays  were  ordered. 

The  question  was  taken;  and  it  was  decided  in  the  negative- 
yeas  21,  nays  110;  as  follows: 

Yeas — Messrs.  Baker,  Samuel  S.  Blair,  Diven,  Eliot,  Fisher, 
Granger,  Hickraan,  Hooper,  Anson  P.  Merrill,  Justin  S.  Morrill, 
Norton,  Olin,  Pendleton,  Sedgwick,  Sheffield,  Shiel,  Sloan, 
Stevens,  Benjamin  F.  Thomas,  Train  and  Vallandigham — 21. 

Nays — Messrs.  Aldrich,  Allej-,  Ancona,  Ashlej^,  Babbitt,  Gold 
smith  F.  Bailey,  Joseph  Bailey,  Baxter,  Beaman,  Bingham,  Jacob 
B.  Blair,  Blake,  William  G.  Brown,  Buffmton,  Calvert,  Campbell, 
Chamberlin,  Clark,  Clements,  Cobb,  Frederick  A.  Conkling,  Ros- 
coe  Conkling,  Conway,  Cox,  Cravens,  Cutler,  Davis,  Dawes,  Dun- 
lap,  Dunn,  Edwards,  Ely,  English,  Fenton,  Fessenden,  Franchot, 
Frank,  Goodwin,  Grider,  Guiiey,  Haiglit,  Hale,  Hanchett,  Har 
ding,  Harrison,  Holman,  Hutchins,  Johnson,  Julian,  Kelley, 
Killinger,  Knapp,  Law,  Leary,  Lehman,  Loomis,  Lovejoy,  Mc- 
Knight,  McPherson,  Mallory,  Marston,  Maynard,  Menzies,  Moor- 
head,  Nixon,  Noble,  Noell,  Nugen,  Patton,  Perry,  Pike,  Pomeroj', 
Porter,  Potter,  Price,  John  H.  Rice,  Richardson,  Riddle,  Sargent, 
Shanks,  Shellabarger,  Sherman,  Smith,  Spaulding,  John  B.  Steele, 
William  G.  Steele,  Stratton,  Francis  Thomas,  Trimble,  Trow- 
bridge,  Van  Horn,  Van  Valkenburgh,  Verre,  Vibbard,  Voorhees, 
Wallace,  Charles  W.  Walton,  E.  P.  Walton,  Ward,  Washburne, 
Webster,  Wheeler,  Whaley,  Albert  S.  White,  Wickliffe,  Wilson, 
Windom,  Woodruff,  Worcester  and  Wright — 110. 

£o  the  House  refused  to  lay  the  amendment  on  the  table. 

The  amendment  providing  for  a  sinking  fund,  being  the  fifth 
Section  of  the  Senate  amendments,  was  now  concurred  in — yeas 
51,  nays  52.  The  remainder  of  the  amendments  being  merely 
verbal,  were  read,  voted  on  in  gross,  and  all  concurred  in. 

On  the  same  clay,  20th  inst,  the  amendments  were  returned  to 
the  Senate  with  a  concurrence  of  the  House  in  a  part  of  the 


148 

amendments,  a  non-concurrence  in  others,  and  with  some  amend 
ments  to  the  Senate's  amendments. 

Mr.  FESSENDEN  moved  that  immediate  action  be  had  on  the 
amendments.  The  motion  was  agreed  to,  and  after  some  prelim 
inary  remarks  by  Mr.  King  and  Mr.  Sherman,  and  without  any 
separate  action  on  the  several  amendments,  Mr.  Fessenden  said: 

"I  will  move,  as  I  understand  the  House  has  adjourned  until  to-mor 
row,  that  the  Senate  insist  on  its  amendments,  disagreed  to  by  the  House, 
and  disagree  to  the  amendments  of  the  House  to  the  amendments  of  the 
Senate,  and  ask  for  a  Committee  of  Conference  on  the  disagreeing  votes  of 
the  two  Houses." 

The  motion  was  agreed  to,  and  the  Chair  appointed  Mr.  Fessen 
den,  Mr.  Sherman  and  Mr.  Carlisle,  as  such  Committee. 

On  the  21st.,  the  action  of  the  Senate  was  reported  to  the 
House,  and  on  motion  of  Mr.  Stevens,  a  Committee  of  Conference 
was  appointed  on  the  part  of  the  House,  as  requested  by  the 
Senate,  consisting  of  Mr.  Stevens,  Mr.  Horton  and  Mr.  Sedgwick. 

The  Conference  Committee  had  long  consultation,  extending 
through  two  or  three  days.  They  finally  compromised  some  of 
the  most  material  of  the  disagreeing  votes  between  the  two 
Houses. 

The  most  material  change  made  was  to  require  the  duties  on 
imports  to  be  paid  in  com,  and  held  as  a  fund  to  pay  the  interest  in 
coin  on  the  funded  debt,  thereby  doing  away  with  the  necessity  of 
forcing  the  bonds  on  the  market  to  procure  coin  for  that  purpose. 
Several  other  alterations  and  amendments  were  agreed  to  in  the 
Committee  of  Conference. 

On  the  24th,  Mr.  Stevens  reported  to  the  House  the  action  of 
the  Conference  Committee,  which  was  agreed  to — yeas  97 ;  nays  22. 

On  the  25th,  Mr.  Fessenden  made  the  same  report  in  the  Senate 
which  was  agreed  to  by  the  Senate  without  a  division ;  and  on  the 
same  day  President  Lincoln  approved  the  bill,  and  thus  the  Legal 
Tender  act,  after  a  most  able  and  determined  opposition,  became 
a  law. 

It  is  not  deemed  important  to  set  forth  in  detail  the  several 
amendments  and  compromises  made  in  the  Committee  of  Confer 
ence.  A  copy  of  the  bill  as  it  passed  the  House  on  the  6th  inst. , 
will  be  found  on  page  96,  and  the  following  is  a  copy  of  the  bill 
as  it  finally  passed  both  Houses,  and  became  a  law.  By  compar 
ing  them,  the  amendments  made  after  the  bill  first  passed  the 
House  will  fully  appear: 


149 

"An  Ad  to  authorize  the  issue  of  Untied  States  notes,  and  for  the  redemption 
or  funding  thereof,  and  for  funding  the  floating  debt  of  the  United  States." 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the  United 
States  in  Congress  assembled,  That  the  Secretary  of  the  Treasury  is  hereby 
authorized  to  issue  on  the  credit  of  the  United  States  one  hundred  and 
fifty  millions  of  dollars  of  United  States  notes,  not  bearing  interest,  pay 
able  to  bearer,  at  the  Treasury  of  the  United  States,  and  of  such  denomi 
nations  as  he  may  deem  expedient,  not  less  than  five  dollars  each. 

Provided,  however,  that  fifty  millions  of  said  notes  shall  be  in  lieu  of  the 
demand  Treasury  notes  authorized  to  be  issued  by  the  act  of  July  17th, 
1861,  which  said  demand  notes  shall  be  taken  up  as  rapidly  as  practicable, 
and  the  notes  herein  provided  for  substituted  for  them ;  and 

Provided  further,  That  the  amount  of  the  two  kinds  of  notes  together 
shall  at  no  time  exceed  the  sum  of  one  hundred  and  fifty  millions  of  dol 
lars  ;  and  such  notes  herein  authorized  shall  be  receivable  in  payment  ol 
all  taxes,  internal  duties,  excises,  debts  and  demands  of  every  kind 
due  to  the  United  States,  except  duties  on  imports,  and  of  all  claims 
and  demands  against  the  United  States  of  every  kind  whatsoever, 
except  for  interest  upon  bonds  and  notes,  which  shall  be  paid  in  coin ; 
and  shall  also  be  lawful  money  and  a  legal  tender  in  payment  of 
all  debts,  public  and  private,  within  the  United  States,  except  duties  on 
imports  and  interest  as  aforesaid ;  and  any  holder  of  said  United  States 
notes  depositing  any  sum  not  less  than  fifty  dollars,  or  some  multiple  of 
fifty  dollars,  with  the  Treasurer  of  the  United  States,  or  either  of  the 
Assistant  Treasurers,  shall  receive  in  exchange  therefor  duplicate  certifi 
cates  of  deposit,  one  of  which  may  be  transmitted  to  the  Secretary  of  the 
Treasury,  who  shall  thereupon  issue  to  the  holder  an  equal  amount  of 
bonds  of  the  United  States,  coupon  or  registered,  as  may  by  said  holder 
be  desired,  bearing  interest  at  the  rate  of  six  per  centum  per  annum,  pay 
able  semi-annually,  and  redeemable  at  the  pleasure  of  the  United  States 
after  five  years,  and  payable  twenty  years  from  the  date  thereof;  and 
such  United  States  notes  shall  be  received  the  same  as  coin,  at  their  par 
value,  in  payment  for  any  loans  that  may  be  hereafter  sold  or  negotiated 
by  the  Secretary  of  the  Treasury,  and  may  be  re-issued  from  time  to  time 
as  the  exigencies  of  the  public  interests  shall  require. 

§  2.  And  be  it  further  enacted,  That  to  enable  the  Secretary  of  the 
Treasury  to  fund  the  Treasury  notes  and  floating  debt  of  the  United 
States,  he  is  hereby  authorized  to  issue  on  the  credit  of  the  United  States 
coupon  bonds  or  registered  bonds,  to  an  amount  not  exceeding  five  hun 
dred  million  dollars,  and  redeemable  at  the  pleasure  of  the  United  States 
after  five  years,  and  payable  twenty  years  from  date,  and  bearing  interest 
at  the  rate  of  six  per  centum  per  annum,  payable  semi-annually ;  and  the 
bonds  herein  authorized  shall  be  of  such  denomination,  not  less  than  fifty 
dollars,  as  may  be  determined  upon  by  the  Secretary  of  the  Treasury ; 
and  the  Secretary  of  the  Treasury  may  dispose  of  such  bonds  at  any  time 
at  the  market,  value  .thereof,  for  lawful  money,  the  coin  of  the  United 
States,  or  for  any  of  the  Treasury^ o~tes  that  have  been,  or  may  hereafter 
be,  issued  under  any  former  act  of  Congress,  or  for  the  United  States 
notes  that  may  be  issued  under  the  provisions  of  this  act;  and  all  stocks, 
bonds,  and  other  securities  of  the  United  States  held  by  individuals,  cor 
porations  or  associations  within  the  United  States,  shall  be  exempt  from 
taxation  by  or  under  State  authority. 


150 

$  3.  And  be  it  farther  enacted,  That  the  United  States  notes  and  the 
coupon  or  registered  bonds  authorized  l>y  this  act  shall  be  in  such  form  as 
the  Secretary  of  the  Treasury  may  direct,  and  shall  bear  the  written  or 
engraved  signatures  of  the  Treasurer  of  the  United  States  and  the  Register 
of  the  Treasurj7",  and  also,  as  evidence  of  lawful  issue,  the  imprint  of  a  copy 
of  the  seal  of  the  Treasury  Department,  which  imprint  shall  be  made 
under  the  direction  of  the  Secretary,  after  the  said  notes  or  bonds  shall  be 
received  from  the  engravers,  and  before  they  are  issued;  or  the  said  notes 
and  bonds  shall  be  signed  by  the  Treasurer  of  the  United  States,  or  for  the 
Treasurer,  by  such  persons  as  may  be  specially  appointed  by  the  Secre 
tary  of  the  Treasury  for  that  purpose,  and  shall  be  countersigned  by  the 
Register  of  the  Treasury,  or  for  the  Register,  by  such  persons  as  the  Sec 
retary  of  the  Treasury  may  appoint  for  that  purpose ;  and  all  the  provis 
ions  of  the  act  entitled  '  An  act  to  authorize  the  issue  of  Treasury  notes, ' 
approved  the  twenty-third  day  of  December,  eighteen  hundred  and  fifty- 
seven,  so  far  as  they  can  be  applied  to  this  act,  and  not  inconsistent 
therewith,  are  hereby  revived  and  re-enacted ;  and  the  sum  of  three  hun 
dred  thousand  dollars  is  hereby  appropriated,  out  of  any  money  in  the 
Treasury  not  otherwise  appropriated,  to  enable  the  Secretary  of  the  Treas 
ury  to  carry  this  act  into  effect. 

§  4.  And  be  it  further  enacted,  That  the  Secretary  of  the  Treasury  may 
receive  from  any  person  or  persons,  or  any  corporation,  United  States 
notes  on  deposit  for  not  less  than  thirty  days,  in  sums  of  not  less  than  one 
hundred  dollars,  with  any  of  the  assistant  treasurers  or  designated 
depositaries  of  the  United  States  authorized  by  the  Secretary  of  the  Treas 
ury  to  receive  them,  who  shall  issue  therefor  certificates  of  deposit,  made 
in  such  form  as  the  Secretary  of  the  Treasury  shall  prescribe,  and  said 
certificates  of  deposit  shall  bear  interest  at  the  rate  of  live  per  centum  per 
annum ;  and  any  amount  of  United  States  notes  so  deposited  may  be  with 
drawn  from  deposit  at  any  time  after  ten  clays'  notice  on  the  return  of  said 
certificates ;  ^Provided,  that  the  interest  on  all  such  deposits  shall  cease 
and  determine  at  the  pleasure  of  the  Secretary  of  the  Treasury ;  and  Pro 
vided  further,  that  the  aggregate  of  such  deposits  shall  at  no  time  exceed 
the  amount  of  twenty-five  million  dollars. 

$  5.  And  be  it  further  enacted,  That  all  duties  on  imported  goods  which 
shall  be  paid  in  coin,  or  in  notes  payable  on  demand,  heretofore 
authorized,  to  be  received  and  by  law  receivable  in  payment  of  public 
dues,  and  the  coin  so  paid  shall  be  set  apart  as  a  special  fund,  and  applied 
as  follows : — 

First— To  the  payment  in  coin  of  the  interest  on  the  bonds  and  notes  of 
the  United  States. 

Second — To  the  purchase  or  payment  of  one  per  centum  of  the  entire 
debt  of  the  United  States,  to  be  made  within  each  fiscal  year  after  the  first 
day  of  July,  1862 ;  which  is  to  be  set  apart  as  a  sinking  fund ;  and  the 
interest  of  which  shall  in  like  manner  be  applied  to  the  purchase  or  pay 
ment  of  the  public  debt,  as  the  Secretary  of  the  Treasury  shall  from  time 
to  time  direct. 

Third— The  residue  thereof  to  be  paid  into  the  Treasury  of  the  United 
States. 

$  6.  And  be  it  further  enacted,  That  if  any  person  or  persons  shall  falsely 
make,  forge,  counterfeit,  or  alter  or  cause  or  procure  to  be  falsely  made, 
forged,  counterfeited  or  altered,  or  shall  willingly  aid  or  assist  in  falsely 
making,  forging,  counterfeiting  or  altering  any  note,  bond,  coupon,  or 


151 

other  security  issued  under  the  authority  of  this  act,  or  heretofore  issued 
under  acts  to  authorize  the  issue  of  Treasury  notes  or  bonds ;  or  shall  pass, 
utter,  publish  or  sell,  or  attempt  to  pass,  utter,  publish  or  sell,  or  bring 
into  the  United  States  from  any  foreign  place,  with  the  intent  to  pass, 
utter,  publish  or  sell,  or  shall  have  or  keep  in  possession,  or  conceal,  with 
intent  to  utter,  publish  or  sell,  any  such  false,  forged,  counterfeited,  or 
altered  note,  bond,  coupon,  or  other  security,  with  intent  to  defraud  any 
body,  corporate  or  politic,  or  any  other  person  or  persons  whatsoever, 
every  person  so  offending  shall  be  deemed  guilty  of  felony,  and  shall,  on 
conviction  thereof,  be  punished  by  fine  not  exceeding  $5,000,  and  by 
imprisonment  and  confinement  to  hard  labor  not  exceeding  15  years, 
according  to  the  aggravation  of  the  offence. 

§  7.  And  be  it  further  enacted,  That  if  any  person,  having  the  custody  ot 
any  plate  or  plates,  from  which  any  notes,  bonds,  coupons,  or  other  securi 
ties  mentioned  in  this  act,  or  any  part  thereof,  shall  have  been  printed,  or 
which  shall  have  been  prepared  for  the  purpose  of  printing  any  such  notes, 
bonds,  coupons,  or  other  securities,  or  any  part  thereof,  shall  use  such 
plate  or  plates,  or  knowingly  permit  the  same  to  be  used  for  the  purpose 
of  printing  any  notes,  bonds,  coupons,  or  other  securities,  or  any  part 
thereof,  except  such  as  shall  be  printed  for  the  use  of  the  United  States,  by 
order  of  the  proper  officer  thereof;  or  if  any  person  shall  engrave,  or  cause 
or  procure  to  be  engraved,  or  shall  aid  in  engraving  any  plate  or  plates  in 
the  likeness  or  similitude  of  any  plate  or  plates  designed  for  the  printing 
of  such  notes,  bonds,  coupons,  or  other  securities,  or  any  part  thereof;  or 
shall  vend  or  sell  any  such  plate  or  plates,  or  shall  bring  into  the  United 
States,  from  any  foreign  place,  any  such  plate  or  plates,  with  any  other 
intent,  or  for  any  purpose,  in  either  case,  than  that  such  plate  or  plates 
shall  be  used  for  printing  of  such  notes,  bonds,  coupons,  or  other  securi 
ties,  or  some  part  or  parts  thereof,  for  the  use  of  the  United  States;  or  shall 
have  in  his  custody  or  possession  any  metallic  plate,  engraved  after  the 
similitude  of  any  plate  from  which  any  such  notes,  bonds,  coupons,  or 
other  securities,  or  any  part  or  parts  thereof,  shall  have  been  printed,  with 
intent  to  use  such  plate  or  plates,  or  cause  or  suffer  the  same  to  be  used, 
iu  forging  or  counterfeiting  any  such  notes,  bonds,  coupons,  or  other 
securities,  or  any  part  or  parts  thereof,  issued  as  aforesaid ;  or  shall  have  in 
his  custody  or  possession,  any  blank  note  or  notes,  bond  or  bonds,  coupon 
or  coupons,  or  other  security  or  securities,  engraved  and  printed  after  the 
similitude  of  any  notes,  bonds,  coupons,  or  other  securities,  issued  as 
aforesaid,  with  intent  to  sell  or  otherwise  use  the  same ;  or  if  any  person 
shall  print,  photograph,  or  in  any  other  manner  execute  or  cause  to  be 
printed,  photographed,  or  in  any  manner  executed,  or  shall  aid  in  printing, 
photographing  or  executing  any  engraving,  photograph  or  other  print,  or 
impression,  in  the  likeness  or  similitude  of  any  such  notes,  bonds,  coupons, 
or  other  securities,  or  any  part  or  parts  thereof,  except  for  the  use  of  the 
United  States  and  by  order  of  the  proper  officer  thereof,  or  shall  vend  or 
sell  any  such  engraving,  photograph,  print,  or  other  impression,  except  to 
the  United  States,  or  shall  bring  into  the  United  States  from  any  foreign 
place  any  such  engraving,  photograph,  print,  or  other  impression  for  the 
purpose  of  vending  or  selling  the  same,  except  by  the  direction  of  some 
proper  officer  of  the  United  States;  or  shall  have  in  his  custody  or  posses 
sion  any  paper  adapted  to  the  making  of  such  notes,  bonds,  coupons,  or 
other  securities,  and  similar  to  the  paper  upon  which  any  such  notes, 
bonds,  coupons,  or  other  securities  shall  have  been  used,  with  intent  to 


152 

use  such  paper,  or  cause  or  suffer  the  same  to  be  used  in  forging  or  coun 
terfeiting  any  of  the  .notes,  bonds,  coupons,  or  other  securities,  issued  as 
aforesaid,  every  such  person  so  offending  shall  be  deemed  guilty  of  a 
felony,  and  shall,  on  conviction  thereof,  be  punished  by  fine  not  exceeding 
five  thousand  dollars,  and  by  imprisonment  and  confinement  to  hard  labor 
not  exceeding  fifteen  years,  according  to  the  aggravation  of  the  offence. 
Approved  February  25,  1862.  A.  LINCOLN." 

Passage  of  the  Treasury  note  bill. 

SAMUEL    WILKESON    TO    THE    N.     Y.     TRIBUNE. 

WASHINGTON,  Tuesday,  Feb.  25,  1862. 

The  Conference  Committee  of  the  Treasury  note  bill  having  concurred, 
and  Mr.  Washburne  having  defeated  another  endeavor  to  adjourn  the  House 
yesterday  as  early  as  two  o'clock,  the  prospect  of  an  invigoration  of  the 
war  by  a  supply  of  money,  and  the  payment  of  soldiers  and  contractors, 
was  good.  The  bill  as  agreed  upon  by  the  conferees  authorizes  the  issue 
of  $150,000,000  of  Treasury  notes,  uniform  in  similitude,  and  a  legal  ten 
der  in  the  payment  of  all  debts,  public  and  private.  It  withdraws  the 
fifty  millions  of  the  July  issue  as  soon  as  it  conveniently  can  be  done, 
makes  the  new  notes  fundable  at  any  time  in  six  per  cent,  twenty  years 
bonds,  redeemable  at  the  pleasure  of  the  United  States  after  five  years ; 
makes  the  interest  on  the  bonds  and  notes  payable  in  coin,  and  (a  new 
feature)  makes  the  duties  on  imports  also  payable  in  coin,  and  devotes 
them  to  the  payment  of  the  interest  on  the  notes  and  bonds,  and  the  crea 
tion  of  a  sinking  fund  by  setting  apart  one  per  cent,  of  the  amount.  The 
provisions  insisted  on  by  the  Senate  authorizing  the  Secretary  of  the 
Treasury  to  sell  six  per  cent,  bonds  for  what  they  will  fetch,  in  order  to 
raise  coin  for  interest,  is  retained  in  the  bill.  All  the  funded  debt  is 
exempted  from  taxation.  Authority  is  given  to  temporarily  deposit 
demand  notes  to  the  extent  of  twenty-five  millions,  on  an  interest  of  six 
per  cent,  after  thirty  days.  The  bill  has  gone  through  both  Houses,  and. 
it  is  supposed,  will  receive  the  President's  signature  to-night.  An  influ 
ence  from  New  York  sent  the  bill  back  again  to  the  Senate  this  morning, 
for  an  amendment  that  should  permit  sixty  millions  of  Treasury  notes  to 
be  used  for  the  payment  of  custom  duties,  the  fifty  millions  authorized  in 
July,  and  the  temporary  relief  ten  millions  authorized  this  month.  This 
was  adopted  and  accepted  by  the  House,  and  it  is  to  be  hoped  that  the 
President  will  now  have  a  chance  to  sign  the  bill,  and  the  abused  public 
creditors  get  their  pay. 

It  is  but  just  to  say,  that  to  the  patient  labor  of  the  Hon.  E.  G.  Spauld- 
ing  the  country  is  greatly  indebted  for  the  early  maturity  of  this  finance 
measure,  and  for  what  vigor  has  been  displayed  in  its  passage  through 
Congress." 

TEMPORARY  DEPOSITS  IN  SUB-TREASURY. 

It  will  be  noticed  that  by  the  4th  section  of  the  Legal  Tender 
act  the  Secretary  of  the  Treasury  was  authorized  to  receive 
deposits  in  the  sub-Treasury  to  the  amount  of  $25,000,000,  in  sums 
of  not  less  than  $100,  at  five  per  cent,  interest,  with  the  privilege 
to  the  depositors  of  drawing  it  out  again  at  any  time,  on  ten  days 
notice,  after  thirty  days.  This  was  but  another  form  of  borrow- 


153 

ing  money  by  the  Government  at  a  low  rate  of  interest.  Its 
operation  at  the  sub-Treasury  was  somewhat  like  that  of  a 
Saving's  Bank,  and  the  privilege  was  largely  availed  of  by  banks, 
insurance  companies  and  individuals.  It  became  a  very  popular 
mode  of  temporary  investment  for  corporations  and  individuals, 
and  although  it  operated  against  funding  in  the  5-20  bonds,  yet  it 
became  an  advantageous  mode  for  the  Government  to  borrow 
large  sums  of  money.  It  became  so  popular  that  on  the  17th  of 
March,  1862,  the  authority  to  receive  these  deposits  was  increased 
to  $50,000,000. 

On  the  llth  of  July  following  the  power  was  enlarged  to  $100,- 
000,000;  and  b}^  the  act  of  January  30,  1864,  the  authority  was 
still  further  enlarged  to  $150,000,000,  and  the  Secretary  was 
authorized  to  pay  as  high  as  six  per  cent,  on  these  deposits. 
Certificates  were  issued  to  the  persons  making  the  deposits,  which 
were  circulated  to  some  extent  at  the  Clearing  Houses,  and  among 
individuals,  which  was  one  mode  of  increasing  the  credit  circula 
tion  of  the  country,  and  thereby  aiding  the  general  inflation  which 
commenced  with  the  passage  of  the  legal  tender  act.  These 
deposits  reached  at  one  time  the  sum  of  $120,176,196. 

CERTIFICATES  OF  INDEBTEDNESS. 

The  issue  of  CERTIFICATES  OF  INDEBTEDNESS  at  one  year,  was 
another  expedient  resorted  to  for  borrowing  mone}',  and  was 
another  mode  of  increasing  the  credit  circulation  of  the  Govern 
ment.  By  the  act  of  March  1,  1862,  the  Secretary  of  the  Treasury 
was  authorized  to  issue  to  creditors,  who  were  willing  to  receive 
them,  '  in  satisfaction  of  audited  and  settled  demands  against  the 
United  States,'  certificates  of  indebtedness  (in  effect  promissory 
notes,)  in  sums  of  not  less  than  $1,000  each,  payable  in  one  year 
at  six  per  cent,  interest.  And  by  the  act  of  the  17th  of  March, 
1862,  this  power  was  enlarged,  so  as  to  embrace  checks  drawn  in 
favor  of  creditors  by  '  disbursing  officers  upon  sums  placed  to 
their  credit  on  the  books  of  the  Treasurer.'  The  power  thus  con 
ferred  on  the  Secretary  to  issue  certificates  of  indebtedness  for 
these  purposes  was  broad  and  unlimited.  The  certificates  issued 
under  these  two  acts  were  in  the  similitude  of  bank  notes  fitted 
for  circulation  us  money,  and  did  circulate  to  a  considerable 
extent  as  currency  until  there  was  such  an  accumulation  of  inter 
est  upon  them  as  to  make  it  an  object  for  capitalists  to  hold  them 
as  an  investment.  The  Secretary  commenced  issuing  these  certifi 
cates  simultaneously  with  the  issue  of  Legal  Tender  (greenback) 


notes,  find  continued  to  issue  them  in  large  amounts  during  the 
progress  of  the  war,  which  was  advantageous  to  the  Government, 
but  at  the  same  time  was  another  fruitful  source  of  inflation,  and 
operated  directly  against  any  considerable  funding  in  the  long 
5-20  bonds.  The  amount  of  indebtedness  in  this  form  on  the  first 
of  November,  1864,  was  $238,593,000,  being  an  amount  greater 
than  the  market  would  bear;  they  were  consequently  depreciated 
and  considerabty  below  par. 

MOKE  LEGAL  TENDER  AUTHORIZED. 

In  less  than  a  month  after  the  passage  of  the  first  legal  tender 
act  another  act  was  passed  at  the  request  of  Secretary  Chase, 
approved  March  17,  1862,  by  which  the  demand  notes  authorized 
by  the  act  passed  at  the  extra  session  in  July,  1861,  and  the  sup 
plementary  act  of  February  12,  1862,  amounting  to  $60,000,000, 
were  declared  to  be  lawful  money  and  a  legal  tender,  in  like  man 
ner,  and  for  the  same  purposes,  and  to  the  same  extent  as  the 
notes  authorized  by  the  first  legal  tender  act.  These  notes,  when 
first  issued,  were  receivable  by  the  Government  for  duties  on 
imports,  but  that  was  not  enough  to  prevent  them  from  depre 
ciating,  and  some  of  the  banks  in  the  principal  cities  refused  to 
receive  them  from  their  customers  as  money.  The  object  to 
make  them  a  legal  tender  was  to  make  them  pass  currently  as 
money  at  the  Clearing  Houses,  and  in  all  business  transactions, 
without  loss  to  the  holders. 

SECRETARY    CHASE      ASKS     FOR     $150,000,000     MORE     LEGAL    TENDER 

NOTES. 

Secretary  Chase  sent  to  the  Committee  of  Ways  and  Means  on 
the  7th  of  June,  1862,  an  official  communication,  accompanied  by 
a  bill  proposed  by  him,  asking,  among  other  things,  for  an  addi 
tional  issue  of  8150,000,000  of  legal  tender  notes;  and  that  of 
this  sum  835,000,000  should  be  of  a  denomination  less  than  five 
dollars.  This  communication  is  published  as  Miscellaneous  Doc 
ument,  No.  81,  and  sets  forth  at  length  the  reasons  why,  in  the 
opinion  of  the  Secretary,  this  additional  issue  should  be  author 
ized  by  Congress.  He  states  that  the  daily  receipts  from  customs 
were  about  $230,000,  and  that  the  average  daily  conversions  of 
legal  tender  notes  into  5-20  bonds  did  not  exceed  $150,000,  while 
the  daily  expenditures  could  not  be  estimated  at  less  than 
$1,000,000,  and  would  probably  exceed  that  sum;  and  that  he  had 
already  exhausted  the  issue  of  legal  tender  notes  authorized  by 
the  act  of  February  25th,  1862. 


155 

"He  proposed  that  authority  be  given  to  the  Secretary  of  the  Treasury 
to  issue  $150,000,000  in  United  States  notes,  in  addition  to  the  issue  already 
authorized ;  and  that  these  be  made  a  legal  tender  for  debts,  except  inter 
est  on  loans,  and  receivable  in  payment  of  all  loans  to  the  United  States, 
and  for  all  Government  dues,  except  duties  on  imports  and  interest. 

If  Congress  shall  see  fit  to  authorize  the  additional  emission  proposed, 
it  seems  highly  expedient  that  such  part  as  the  public  convenience  shall 
require  be  issued  in  denominations  less  than  five  dollars.  I  am  aware  of 
the  general  objections  to  the  issue  of  notes  under  five  dollars,  and  concede  their 
cogency.  Indeed,  under  ordinary  circumstances  they  are  unanswerable. 
But  in  the  existing  circumstances  of  the  country,  they  lose  most,  if  not 
all,  their  force. 

The  country  is  involved  in  the  expenditures  of  a  contest  for  national 
existence,  and  it  is  highly  desirable  that  the  burdens  of  the  people  be 
made  as  tolerable  as  possible.  If  the  restriction  on  the  issue  of  small 
denominations  be  removed,  the  wants  of  the  country  will  absorb  a  circu 
lation  of  $25,000,000,  and  perhaps  more.  The  interest  on  this  circulation, 
say  $1,500,000  a  year,  will  be  saved  to  the  tax  payers. 

Payments  to  public  creditors,  and  especially  to  soldiers,  now  require 
large  amounts  of  coin  to  satisfy  fractional  demands  less  than  five  dollars. 
Great  inconveniences  in  payment  of  the  troops  are  thus  occasioned. 
With  every  effort  on  the  part  of  the  Treasury  to  provide  the  necessary 
amount  of  coin,  it  is  found  impracticable  always  to  satisfy  the  demand. 
When  the  amount  required  is  furnished,  the  temptation  to  disbursing 
officers  to  exchange  it  for  any  small  bank  notes  that  the  soldiers  or  the 
public  creditors  will  take^  is  too  great  to  be  alwaj^s  resisted.  And  even 
when  the  coin  reaches  the.  creditors  it  is  seldom  held,  but  passes,  in  general,  imme 
diately  into  the  hands  of  sutlers  and  others,  and  disappears  at  once  from  circula 
tion.  The  inconvenieucies,  therefore,  to  the  Government  and  creditors, 
from  the  absence  of  United  States  notes  of  small  denominations,  are  not 
compensated  by  benefits  to  anybody. 

It  may  properly  be  further  observed  that  since  the  United  States  notes 
are  made  a  legal  tender,  and  maintained  nearly  at  the  par  of  gold,  by  the  pro 
vision  for  their  conversion  into  bonds  bearing  six  per  cent,  interest, 
payable  in  coin,  it  is  not  easy  to  see  why  small  notes  may  not  be  issued  as 
wisely  as  large  ones.  The  notes  made  a  legal  tender  circulate  as  money ; 
and  the  Government  may  authenticate,  by  device  and  imprint,  small  notes 
as  well  as  small  coins.  The  limit  is  to  be  found  only  in  public  conven 
ience,  which  indicates  denominations  in  gold,  leaving  the  smaller  circula 
tion  of  silver  (less  valuable  than  gold,)  as  before. 

Another  consideration  which  deserves  to  be  taken  into  the  account  is 
this :  that  resumption  of  payments  in  specie  can  be  more  certainly  and 
easily  effected,  and  with  far  less  of  inconvenience  and  loss  to  the  commu 
nity,  if  the  currency,  small  as  well  as  large,  is  of  United  States  notes,  than 
if  the  channels  of  circulation  are  left  to  be  filled  up  by  the  emissions  of 
non-specie  paying  corporations,  solvent  and  insolvent. 

These  considerations  of  economy,  of  public  advantage,  and  of  private 
convenience,  seem  to  me  to  justify  fully  the  removal  of  the  restriction 
upon  the  issue  of  small  notes. 

I  propose,  further,  to  make  arrangenients  for  the  necessary  engraving 
and  other  work  for  the  printing  and  preparation  for  issue  of  these  notes  in  the 
Treasury  Department  at  Washington.  I  am  led  to  believe  that  a  very  con- 


156 

siderable  reduction  of  expense  can  be  thus  effected.    The  prospect,  in  my 
judgment,  certainly  warrants  the  trial. 

With  these,  objects  I  have  prepared  a  bill,  which  I  herewith  submit  to 
the  consideration  of  the  committee.  The  condition  of  the  Treasury  renders 
prompt  action  highly  desirable;  and  I  trust  it  is  not  necessary  to  assure  the 
Committee  or  Congress  that,  should  the  powers  asked  for  be  granted,  they 
will  be  exercised  only  with  the  most  careful  reference  to  the  requirements 
of  the  public  interests.  Whatever  the  authority  granted  may  be,  no  issue 
of  notes  will  be  made  except  to  replace  notes  withdrawn  and  canceled, 
and  to  meet  the  current  expenditures  authorized  by  Congress,  which  can 
not  be  met  from  the  receipts  of  revenue,  from  the  increase  of  deposits,  and 
from  the  proceeds  of  the  conversion  into  five-twenties. 

With  great  respect,  S.  P.  CHASE, 

Secretary  of  the  Treasury." 
'•Hon.  TIIADDEUS  STEVENS, 

Chairman  Committee  of  Ways  and  Means." 

The  bill  thus  recommended  by  Secretary  Cliase  was  taken  up  in 
the  Committee  of  Ways  and  Means  and  duly  considered.  After 
considerable  discussion  Mr.  Stevens  was  authorized  to  report  it  to 
the  House,  but  without  the  power  to  issue  notes  less  than  five  dol 
lars.  On  the  11  th  of  June,  Mr.  Stevens  reported  the  bill  and  the 
foregoing  letter  of  the  Secretary  to  the  House.  They  were 
referred  to  the  Committee  of  the  Whole  and  ordered  to  be  printed. 
On  the  13 th  inst.,  the  bill  was  made  the  special  order  for  Tues 
day,  the  17th.,  and  to  continue  the  special  order  until  disposed  of. 

MR.   SPAULDING'S  SPEECH. 

On  the  17th  of  June,  the  second  bill  for  an  additional  issue  of 
$150,000,000  legal  tender  notes,  Mr.  Spaulding  opened  the  debate 
in  a  lengthy  speech.  The  House  being  in  Committee  of  the 
Whole  (Mr.  Phelps,  of  Missouri,  in  the  chair)  on  the  bill  recom 
mended  by  the  Secretary  of  the  Treasury,  for  authority  to  issue 
the  additional  sum  of  United  States  notes,  Mr.  Spaulding  said: 

"Mr.  CHAIRMAN — This  is  an  important  measure,  and  I  desire  to  submit 
a  few  remarks  in  the  opening  of  the  debate  upon  the  subject. 

The  requirements  of  the  Treasury  will  probably  not  be  less  than  $250,- 
000,000  to  meet  the  current  expenses  to  the  1st  of  January  next.  How  is 
this  large  sum  to  be  obtained?  I  believe  it  can  only  be  obtained  in  the 
mode  which  has  been  successfully  adopted  during  the  last  six  months. 
The  financial  plan  initiated  six  months  ago  as  a  necessary  war  measure 
has  worked  well.  It  has  exceeded  the  most  sanguine  expectations  of  its 
strongest  advocates.  The  Secretary  of  the  Treasury  recommends  a  con 
tinuance  of  the  plan  which  has  so  successfully  carried  the  country  through 
the  perils  of  the  past  six  months.  I  shall  cordially  co-operate  with  the 
Secretary,  hoping  that  it  may  be  equally  successful  in  the  future.  It  is 
our  duty  now  to  provide  all  the  means  which  shall  be  necessary  to  pay  all 
the  current  expenses  to  the  1st  day  of  January.  The  bill  now  under  con 
sideration  is  deemed  necessary  for  that  purpose,  and  the  Secretary  assures 


157 

us  that  the  condition  of  the  Treasury  renders   prompt  notion  highly 
desirable. 

During  the  pending  war,  neither  the  President,  the  Secretary  of  the 
Treasury,  nor  Congress,  can  fix  a  limit  to  the  expenditures  of  the  Gov 
ernment,  and  cannot,  therefore,  fix  a  limit  to  the  obligations  to  be  issued 
on  its  credit.  All  that  the  Secretary  can  say,  all  that  Congress  can 
declare,  is,  that  the  President,  as  Comniander-in-Chief,  by  his  subordinate 
officers,  must  contract  all  the  debts  which  shall  be  necessary  to  maintain 
the  army  and  navy,  and  all  other  expenses  incident  to  a  vigorous  prosecu 
tion  of  the  war.  The  largest  latitude  is  given  to  the  President,  Secretary 
of  War,  and  Secretary  of  the  Navy,  in  carrying  on  the  war.  They  have 
full  discretionary  power  to  contract  all  the  debts  which  they  may  deem 
necessary  to  amply  supply  the  army  and  navy.  All  parties  loyal  to  the 
Government  are  united  in  urging  a  vigorous  prosecution  of  the  war ;  all 
parties,  therefore,  ought  to  be  willing  to  furnish  all  the  means  necessan 
for  this  purpose.  We  must,  at  any  rate,  pay  all  the  debts  contracted  by 
the  Executive  in  the  progress  of  the  war.  If  we  knew  how  much  this 
would  amount  to  we  could  easily  figure  up  the  amount  of  the  bonds  and 
notes  which  Congress  must  authorize  the  Secretary  to  issue.  ]STo  man, 
not  even  the  President,  the  Secretary  of  War,  the  Secretary  of  the  Navy, 
the  Secretary  of  the  Treasury,  or  the  Chairman  of  the  Committee  of  Ways 
and  Means,  or  all  of  them  together,  can  give  even  an  approximate  esti 
mate  as  to  the  wThole  cost  of  this  war,  because  they  do  not  know  the 
number  of  years  it  will  continue,  nor  what  will  be  the  final  solution  of 
the  grave  questions  involved.  We  are  working  out  a  great  problem,  the 
result  of  which  no  man  can  know.  Slavery  was  the  cause  of  this  war; 
and  until  the  solution  of  the  slavery  question  is  arrived  at,  and  the  cause" 
of  the  rebellion  removed,  we  have  no  hope  of  permanent  peace  and  tran- 
quility.  This  will  take  a  long  time ;  but  how  long  no  man  is  wise  enough 
to  determine.  The  war  debt  we  all  know  is  already  large,  and  that  it  is 
growing  fearfully  larger  every  day.  Many  capitalists  and  bankers  have 
already  invested  all  their  surplus  means  in  United  States  stocks. 

During  the  debate  on  the  Treasury  note  bill  in  January  and  February 
last,  I  submitted,  with  some  degree  of  diffidence  as  to  its  accuracy,  an 
estimate  of  what  I  thought  the  whole  debt  (floating  as  well  as  funded 
debt)  of  the  United  States  would  be  on  the  1st  of  July  next,  and  also 
what  the  funded  and  floating  debt  would  be  on  the  1st  of  July,  180.')',  if 
the  war  should  be  prosecuted  to  that  time  on  the  same  scale  that  it  is  now 
carried  on.  I  have  not  seen  since,  and  do  not  now  see,  any  reason  to 
change  the  estimates  I  then  made.  I  then  said  it  was  impossible  to  esti 
mate,  definitely,  what  the  war  would  cost,  and  therefore  it  was  impossible 
to  fix  any  limit  to  the  amount  of  paper  (obligations  of  the  Government 
either  in  the  form  of  notes,  bonds  or  certificates  of  deposit)  that  must  be 
issued  during  its  prosecution.  The  experience  of  the  last  few  months  lias 
demonstrated  the  truth  of  these  remarks.  We  must  first  apply  all  the 
money  we  can  collect  from  duties  on  imports,  excises,  internal  duties, 
direct  taxes,  and  confiscations  of  the  property  of  rebels,  which  may 
amount,  during  the  current  year,  (of  money  actually  realized)  to  £!:>:>,- 
000,000,  perhaps  more,  and  possibly  less.  All  the  expenses  of  the  war. 
over  and  above  the  amount  realized  from  these  sources,  must  be  provided 
for  by  borrowing  in  some  form  upon  the  credit  of  the  Government. 
Paper  credit  in  some  form  must  be  issued  during  the  next  fiscal  year  to  a 
very  large  amount.  However  much  we  may  depreciate  it,  this  will  be  an 
imperative  necessity  which  we  cannot  avoid.  However  much  this  mav 


158 

be  a  departure  from  sound  business  and  financial  principles  applicable  to 
times  of  peace,  we  cannot,  we  must  not,  shrink  from  the  responsibility 
which  is  forced  upon  us  in  the  prosecution  of  this  war.  We  must  boldly 
meet  every  exigency  in  financial  as  Avell  as  in  military  and  naval  opera 
tions.  Notes  and  bonds  must  be  authorized  by  Congress,  and  must  be 
negotiated  by  the  Secretary  of  the  Treasury,  amply  sufficient  to  sustain 
the  army  and  navy,  or  the  war  must  stop.  If  we  have  not  the  money,  we 
have  what  is  equally  or  more  important :  the  country  is  full  of  provisions, 
clothing,  and  the  material  of  war.  Treasury  notes  and  bonds,  issued  on 
the  credit  of  the  Government,  will  procure  all  these  supplies  to  maintain 
your  army  and  navy.  The  war,  therefore,  can  go  on,  and  will  go  on  vig 
orously  if  we  carry  out  the  views  submitted  to  us  by  the  Secretary  of  the 
Treasury. 

In  what  form  or  mode  has  the  credit  of  the  Government  been  thus  far 
used  in  the  prosecution  of  this  Avar  ?  Five  different  forms  of  credit  have 
been  resorted  to.  Loans  to  the  Government,  for  which  obligations  have 
been  issued,  are  as  follows : 

1.  United  States  notes,  without  interest,  made  a  legal  tender,  and  cir 
culated  as  money  among  the  people  in  all  parts  of  the  United  States. 
This  is  the  people's  loan  to  the  Government,  and  the  most  popular  mode 
of  borrowing  ever  adopted  by  any  Government.    It  has  given  the  country 
a  sound  national  currency,  in  which  the  people  have  had  entire  confidence. 
Every  man,  woman  and  child  having  a  five  dollar  legal  tender  greenback 
note  in  possession,  has  directly  or  indirectly  loaned  to  the  Government 
that  amount,  and  becoming  thereby  interested  in  the  perpetuity  of  the 
Government,  is  a  strong  advocate  for  a  vigorous  prosecution  of  the  war. 
A  fair  test  of  the  loyalty  of  all  such  holders  of  notes  may  be  seen  in  their 
manifestation  of  confidence  that  they  are  perfectly  good.     The  soldiers 
and  sailors  give  their  services,  risk  their  lives,  and  endure  all  the  hard 
ships,  sickness,  and  privations  of  the  campaign,  and  cheerfully  take  these 
notes  in  payment.    Supplies,  subsistence,  and  material  of  war  of  every 
kind  is  eagerly  furnished,  and  these  greenbacks  taken  in  exchange  for  the 
same.    This  kind  of  loan  is  so  popular  with  the  people,  and  being  without 
interest,  is  so  advantageous  to  the  Government,  it  is  desirable  that  it 
should  be  extended  as  far  as  it  can  be  done  safely,  and  without  unduly 
stimulating  speculations  to  such  an  extent  as  to  cause  an  unfavorable 
reaction  to  the  legitimate  business  of  the  country.     But  when  bonds  can 
be  negotiated  at  par,  I  think  it  will  be  safer  to  have  bonds  negotiated  than  to 
issue  legal  tender  notes. 

2.  The  second  kind  of  loan  has  been  the  issue  of  bonds  running  from 
five  to  twenty  years  at  six  per  cent,  interest  per  annum,  which  is  an 
advantageous  mode  for  the  Government  to  borrow  money,  because  the 
debt  is  then  funded;  and  it  is  also  favorable  to  commerce,  because  it 
causes  no  disturbance  in  the  money  market  or  business  of  the  country, 
provided  the  money  is  not  taken  from  the  capital  of  men  engaged  in 
active  business,  but  is  obtained  from  capitalists  who  desire  permanent 
investments,  and  who  only  want  to  use  the  interest  half-yearly.    This 
mode  of  borrowing  must  necessarily  be  limited  to  the  amount  of  accu 
mulated  capital  in  the  country,  held  by  those  who  are  willing  to  invest  it 
in  this  way.    It  is  a  permanent  and  safe  investment  in  the  hands  of  those 
persons  who  want  to  use  only  the  interest  on  their  accumulated  capital. 

!},  A  third  kind  of  loan  which  has  thus  far  worked  very  well  in  prac 
tice,  are  deposits  in  the  Treasury  of  the  United  States,  for  which  certificates 


159 

are  issued,  bearing  four  and  live  per  cent,  interest,  and  which  deposits 
may  be  withdrawn  from  the  Treasury  on  giving  ten  days'  notice  after 
thirty  days.  The  Government  has  borrowed  over  fifty  million  dollars  at 
this  low  rate  of  interest,  and  the  bill  now  before  us  proposes  to  give  the 
Secretary  power  to  extend  the  amount  to  $100,000,000.  To  guard  against 
any  sudden  call  that  may  be  made  for  these  deposits,  the  Secretary  pro 
poses  to  keep  on  hand,  in  Treasury  notes,  ready  to  be  issued,  one-third 
of  the  amount  of  the  current  deposits  which  may  at  any  time  be  in  the 
Treasury.  With  this  safeguard,  this  kind  of  loan  will  be  very  advan 
tageous  to  the  Government  as  well  as  to  the  depositors. 

4.  Certificates  of  indebtedness  at  one  year, '.bearing  six  per  cent,  inter 
est  per  annum,  given  in  payment  of  supplies,  transportation,  and  material 
furnished  in  the  prosecution  of  the  war.    This  is  an  advantageous  form  of 
credit  given  to  the  Government,  because  it  is  for  a  definite  time  and  at  the 
customary  rate  of  six  per  cent,  interest.    This  form  of  indebtedness  has 
already  reached  about  fifty  million  dollars,  and  may  be  still  further 
increased  under  the  law  already  in  existence. 

5.  Treasury  notes  at  three  years,  bearing  seven  and  three-tenths  per 
cent,  interest  per  annum,  payable  half-yearly,  and  convertible  into  twenty- 
years  six  per  cent,  bonds.    This  is  the  most  objectionable  form  of  borrow 
ing  of  any  that  has  been  adopted,  for  the  reason  that  the  rate  of  interest  is 
too  high— a  much  higher  rate  than  this  great  Government,  with  all  its 
immense  power  and  resources,  ought  to  pay.     I  think  this  form  of  borrow 
ing  money  should  only  be  resorted  to  when  we  cannot  obtain  the  money 
to  carry  on  the  war  in  any  other  way. 

The  liquidated  and  funded  debt  of  the  United  States,  as  reported  by  the 
Secretary  of  the  Treasury  to  Congress,  May  29,  1862,  was  as  follows: 

Rate  of  Interest.  Amount. 

Loan,  1842 ---6  $2,883,364 

Loan,  1847 - -6  9,415,250 

Loan,  1848 --6  8,908,342 

Loan,  1858 1 5  20.000,000 

Loan^  1860 5  7,022,000 

Loan,  1850 5  3,461,000 

Loan,  1861— February  8 6  18,415,000 

Loan,  1861— July  17 -  -6  50,000,000 

Loan,  1861— July  17 7.3  120,523,450 

Loan,  1861— Oregon 6  878,650 

Loan,  1862 6  2,699,400 

Treasury  Certificates 6  47, 199, 000 

Treasury  notes,  ordered -  -6  3,382,162 

United  States  notes 0  145,880,000 

Temporary  deposits 5  44,865,524 

Temporary  deposits --4  5,913,042 

Total,  (average  interest  4.35) $491,446,184 

Reducing  the  above  total  to  the  round  sum,  in  English  money,  of  £100,- 
000,000  sterling,  we  have  this  contrast  of  the  magnitude  of  the  public  debts 
respectively  of  Great  Britain  and  the  United  States,  and  the  annual  cost  of 
their  support;  public  debt  of  Great  Britain,  £800.000,000,  at  an  annual 
charge  of  £28,262,000;  public  debt  of  the  United  States,  £100,000,000,  at  an 
annual  charge  of  £4,350,000. 
There  is  still  another  kind  of  indebtedness— the  floating  debt  created  in 


160 

various  forms  every  day  by  officers  of  the  Government.  This  accrued 
indebtedness,  existing  in  different  forms,  must,  with  our  extended  line  of 
military  and  naval  operations,  be  very  large.  It  exists  in  the  shape  of 
accounts,  services,  transportation,  bounties,  and  all  other  modes  in  which 
debts  are  made  against  the  Government  in  enlisting,  calling  out  the 
militia,  and  in  supplying  the  army  and  navy  with  the  necessary  material 
of  war.  On  this  kind  of  indebtedness  the  Government  gets  a  credit  of 
from  one  to  four  months.  The  whole  accrued  indebtedness  of  the  United 
States,  funded  and  unfunded,  on  the  1st  day  of  July  next,  it  is  believed, 
will  not  exceed  $650,000,000* 

I  never  have  been,  and  I  trust  I  never  shall  be,  unnecessarily  an  advo 
cate  for  the  creation  of  an  unsound  or  an  inflated  currency;  but,  sir,  I 
have  long  ago  resolved,  since  this  savage  war  has  been  forced  upon  us,  to 
do  whatever  was  necessary,  and  which  I  might  lawfully  do,  to  crush  out 
the  traitors  and  annihilate  their  armies.  This  cannot  be  done  without  the 
'sinews  of  war.'  Your  army  and  navy  must  be  supplied  with  all  the  ter 
rible  armament  necessary  to  crush  the  enemy.  Your  sick,  wounded  and 
famishing  soldiers  must  be  supplied  with  hospitals,  medical  attendance, 
and  all  necessaries  and  conveniences  to  make  them  comfortable.  This  is 
a  plain  duty  which  wre  cannot  any  of  us  fail  to  perform.  If,  in  the  per 
formance  of  this  duty,  it  becomes  necessary  to  authorize  a  further  issue  of 
United  States  notes,  I  shall  not  hesitate  to  give  my  vote  for  it.  /  am  not 
in  favor  of  increasing  the  issue  of  them  'beyond  the  imperative  necessities  of  the 
Government  to  sustain  the  army  and  navy.  I  much  prefer  to  have  our  six  per 
cent,  bonds  issued  on  permanent  loans.  I  would  like  to  see  the  Secretary  of  the 
Treasury  borrow  at  par  all  the  money  he  can  on  the  six  per  cent,  bonds  heretofore 
authorized  to  be  issued. 

When  money  can  be  obtained  at  par  on  six  per  cent,  bonds,  I  would  prefer  to 
have  that  done  to  the  issuing  a  very  large  amount  of  legal  tender  notes.  Too 
large  an  issue  of  demand  notes,  to  circulate  as  money,  will  no  doubt  lead 
to  an  expansion  which  will  inflate  prices,  stimulate  undue  speculation, 
and  ultimately  produce  a  reaction  that  will  derange  the  whole  business  of 
the  country.  This  is  to  be  avoided  if  possible.  I  cannot,  therefore,  advo 
cate  any  greater  issue  of  demand  notes  than  the  absolute  necessities  of  the 
Government  require  to  carry  on  the  war  with  vigor.  I  am  disposed  to 
give  the  Secretary  power  to  issue  the  additional  $150,000,000  United  States 
notes  asked  for  by  him ;  but,  at  the  same  time,  2  feel  the  importance  of  hav 
ing  this  power  exercised  discreetly,  and  I  trust  that  he  ivill  not  issue,  or  pay  them 
out  at  all,  when  money  can  be  obtained  at  par  on  our  six  per  cent,  bonds.  I  do 
not  understand  that  the  Secretary  intends  to  have  them  all  issued  and  put 
into  circulation  at  any  one  time ;  on  the  contrary,  I  believe  he  has  no  such 
intention.  He  wants  the  power  to  issue  and  use  them  if  necessary,  but 
not  otherwise.  When  he  can  obtain  a  sufficient  amount  of  money  at  par, 
on  six  per  cent,  bonds,  or  by  temporary  deposits  in  the  Treasury,  there 
will  be  110  necessity  for  their  issue,  and  the  Secretary  assures  us  in  his  letter 
that  no  further  issue  of  notes  will  be  made  when  thai  can  be  done;  and,  besides, 
the  bill  provides  for  his  retaining  in  his  own  hands  legal  tender  notes 
equal  to  one-third  of  the  temporary  deposits  that  may  be  in  the  Treasury. 
Our  army  and  navy  and  all  debts  of  the  Government  should  be  punctually 
paid.  No  sacrifice  on  our  part  should  be  too  great  to  raise  all  the  means 
necessary  for  this  purpose.  The  Secretary  should,  therefore,  be  clothed 
with  ample  power  to  meet  any  exigency  that  may  arise.  . 

The  money  for  the  large  liabilities  of  the  Government  that  have  actually 


161 

been  met  and  canceled  since  the  passage  of  the  first  legal  tender  note  bill, 
could  not  have  been  raised  by  a  forced  sale  of  six  per  cent,  bonds  without 
a  heavy  sacrifice.  When  that  bill  passed  this  House  our  six  per  cent,  twenty  - 
years  bonds  were  ten  per  cent,  below  par.  Now  they  are  from  one  to  two  per  cent, 
above  the  price  of  gold.  If,  at  the  time  of  the  passage  of  the  first  jiote  bill, 
large  amounts  of  bonds  had  been  forced  upon  the  market,  as  would  have 
been  necessary  but  for  the  passage  of  that  bill,  it  would  have  depressed 
the  six  per  cent,  bonds  still  lower.  There  was  not  then  money  enough  in 
the  country  seeking  permanent  investment,  to  absorb  all  the  bonds 
required  by  the  Government  to  meet  the  immediate  and  pressing  demands 
upon  the  Treasury.  This  state  of  things  may  again  occur.  I  hope  not. 
I  trust  that  there  will  be  no  necessity  for  any  considerable  issue  of  new 
notes ;  but  to  guard  against  possible  contingencies,  I  am  willing  to  confer 
large  powers  upon  the  Secretary,  believing  that  he  will  exercise  the  power 
wisely,  patriotically,  and  for  the  best  interests  of  the  country.  I  shall  not, 
therefore,  hesitate  to  clothe  him  with  this  great  power,  and  shall,  under 
the  exigencies  of  the  crisis,  vote  for  this  additional  issue  of  legal  tender 
notes. 

As  to  the  propriety  of  authorizing  the  Secretary  to  issue  a  portion  of 
this  amount  in  sums  less  than  five  dollars,  I  should,  under  ordinary  cir 
cumstances,  oppose  giving  such  authority.  As  a  general  rule,  the  issue  of 
small  notes  should  not  be  adopted  for  a  national  currency;  but  I  am  dis 
posed,  in  the  present  exigency,  to  vote  for  this  provision,  in  accordance 
with  the  suggestions  of  the  Secretary  of  the  Treasury,  and  for  the  reasons 
urged  by  him  in  his  communication,  sent  to  us  on  the  7th  inst. 

I  have  thus  briefly  stated  the  condition  and  wants  of  the  Treasuiy. 
Two  hundred  and  fifty  million  dollars  will  be  required,  as  I  stated  before, 
to  carry  us  to  the  1st  of  January  next.  That  is  more  than  the  coin  in  all 
the  banks  of  the  United  States,  and  nearly  equal  to  all  the  coin  of  the 
United  States  in  the  hands  of  individuals  and  banks ;  the  whole  amount  of 
gold  and  silver  held  by  the  banks  and  individuals  being  only  about  $265,- 
000,000.  The  ground  upon  which  the  Secretary  of  the  Treasury,  and  upon 
which  the  Committee  of  Ways  and  Means  rest  this  issue  of  notes,  is  the 
necessity  of  the  case.  The  Secretary  urges  immediate  action  in  view  of 
the  condition  of  the  Treasury.  I  therefore  trust  the  House  will  take  up 
this  bill  in  the  regular  wray,  debate  it  to  the  extent  which  may  seem  desir 
able  and  necessary,  and  pass  it  at  as  early  a  day  as  possible." 

MR.    GOLF  AX'S    SPEECH. 

Mr.  COLFAX  suggested  that  the  bonds,  into  which  the  notes  are  con 
vertible,  ought  to  be  absolutely  twenty  years  bonds,  instead  of  allowing  the 
Government  the  right  to  redeem  them  after  five  years.  The  bonds  of  '81 
having  absolutely  twenty  years  to  run,  were  selling  yesterday  in  New 
York  at  six  per  cent,  above  par  for  greenbacks,  while  the  5-20  bonds 
would  not  bring  such  a  premium.  If  they  would  command  any  such 
premium,  these  notes,  convertible  into  such  bonds,  would  be  brought  in 
for  conversion  with  great  rapidity,  and  there  would  not  be  a  margin  of 
six  per  cent,  between  gold  and  legal  tender  notes.  He  thought  it  best  to 
legislate  in  such  a  manner  as  to  approximate  these  notes  to  gold. 

Mr.  STEVENS — "I  agree  perfectly  with  the  remarks  made  by  the  gentle 
man  from  Indiana.  I  opposed  the  substitution  of  five  years  bonds  for 
twenty  years  bonds  when  the  question  was  before  the  House,  but  the 
House  differed  with  me.  The  Senate  amended  the  bill,  and  when  it  came 


162 

back  from  the  Senate,  the  House  agreed  with  the  Senate  after  discussion 
here.  He  said  that  a  majority  of  the  Committee  of  Ways  and  Means  were 
not  in  favor  of  the  recommendation  of  the  Secretary  to  issue  notes  less 
than  live  dollars,  but  he  understood  that  some  member  of  the  Committee 
would  offer  an  amendment  in  accordance  with  the  recommendation  of 
the  Secretary  of  the  Treasury." 

Mr.  SPAULDIXG  afterwards  offered  an  amendment  that  no  part 
of  these  legal  tender  notes  should  be  '  *  for  fractional  parts  of  a 
dollar,  and  that  not  more  than  $50,000,000  should  be  of  a  less 
denomination  than  five  dollars,"  which  was  adopted. 

The  bill  continued  to  be  discussed  by  different  members  of  the 
House  from  day  to  day  until  the  24th  of  June,  when  it  passed  the 
House  in  substantially  the  same  form  as  recommended  by  the 
Secretary  of  the  Treasury,  by  yeas  76,  nays  47,  as  follows: 

Yeas — Messrs.  Aldrich,  Alley,  Arnold,  Babbitt,  Bailey,  Bea- 
man,  Bingham,  Francis  P.  Blair,  Jacob  B.  Blair,  Samuel  S.  Blair, 
Blake,  William  G.  Brown,  Campbell,  Case}',  Chamberlin,  Clark, 
Colfax,  Cutler,  Davis,  Delaplaine,  Duell,  Dunn,  Edgerton,  Ed 
wards,  Ely,  Fenton,  Fessenden,  Franchot,  Granger,  Guiiey, 
Haight,  Hale,  Hall,  Hanchett,  Harrison,  Hooper,  Hutchins,  Kel- 
ley,  Francis  W.  Kellogg,  Lansing,  Loomis,  Lovejoy,  Law,  Mc- 
Knight,  Maynard,  Mitchell,  Moorhead,  Nixon,  Noell,  Nugen, 
Olin,  Timothy  G.  Phelps,  Pomero}-,  Potter,  Price,  John  H.  Rice, 
Riddle,  Sargent,  Shanks,  Shellabarger,  Sherman,  Sloan,  Spaulding, 
Stevens,  Trimble,  Trowbridge,  Van  Horn,  Van  Valkenburgh, 
Verree,  Wall,  Wallace,  Washburne,  Wheeler,  Whaley,  Wilson, 
Windom  and  Worcester — 76. 

Nays — Messrs.  William  J.  Allen,  Baker,  Biddle,  George  H. 
Browne,  Buffinton,  Calvert,  Clements,  Cobb,  Roscoe  Conkling, 
Corning,  Cravens,  Crisfield,  Dawes,  Delano,  Dunlap,  Eliot,  English, 
Fouke,  Goodwin,  G rider,  Harding,  Johnson,  Law,  Menzies,  Jus 
tin  S.  Merrill,  Norton,  Pendleton,  Perry,  John  S.  Phelps,  Porter, 
Alexander  H.  Rice,  Richardson,  Sheffield,  Shiel,  Stiles,  Benjamin 
F.  Thomas,  Francis  Thomas,  Vallandigham,  Vibbard,  Wadsworth, 
Walton,  Ward,  Webster,  Chilton  A.  White,  Wickliffe,  Wood  and 
Woodruff— 47. 

So  thejbill  was  passed. 

BILL    IN    THE    SENATE. 

On  the  25th  of  June  the  bill  was  received  in  the  Senate  and 
referred  to  the  Finance  Committee.  On  the  28th  this  Committee 
reported  the  bill  with  amendments.  On  the  2d  of  July  it  was 


103 

fully  discussed,  and  after  being-  amended,  passed  the  Senate  by 
yeas,  22,  nays  13,  as  follows: 

Yeas — Messrs.  Anthony,  Browning,  Chandler,  Clark,  Dixon, 
Foot,  Hale,  Harris,  Henderson,  Howard,  Howe,  Lane  (of  Indiana), 
Lane  (of  Kansas),  Morrill,  Pomeroy,  Simmons,  Simmer,  Ten  Eyck, 
Wade,  Wilkinson,  Willey  and  Wilson  (of  Missouri) — 22. 

Nays — Messrs.  Carlisle,  Collamer,  Cowan,  Davis,  Foster,  Har- 
lan,  King,  Powell,  Saulsbury,  Sherman,  Stark,  Trumbull  and 
Wright — 13. 

The  amendments  of  the  Senate  were  not  agreed  to  by  the 
House,  and  the  disagreeing  votes  between  the  two  Houses,  were 
finally  settled  by  a  Conference  Committee,  consisting  of  Mr.  Fes- 
senden,  Mr.  Sherman  and  Mr.  Wright  on  the  part  of  the  Senate, 
and  Mr.  Stevens,  Mr.  Spaulding  and  Mr.  Phelps  on  the  part  of 
the  House.  The  report  of  the  Conference  Committee  was  finally 
agreed  to  on  the  8th  of  July,  and  on  the  llth  President  Lincoln 
approved  the  bill,  which  is  as  follows : 

CHAPTER  CXLII. 

"An  Act  to  authorize  an  additional  issue  of   United  Mates  Notes,  and  for 
oilier  purposes. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the  United  States 
of  America,  in  Congress  assembled,  That  the  Secretary  of  the  Treasury  is 
hereby  authorized  to  issue,  in  addition  to  the  amounts  heretofore  author 
ized,  on  the  credit  of  the  United  States,  one  hundred  and  fifty  millions  of 
dollars  of  United  States  notes,  not  bearing  interest,  payable  to  bearer  at 
the  Treasury  of  the  United  States,  and  of  such  denominations  as  he  may 
deem  expedient ;  Provided,  That  no  note  shall  be  issued  for  the  fractional 
part  of  a  dollar,  and  not  more  than  thirty-five  millions  shall  be  of  lower 
denominations  than  five  dollars ;  and  such  notes  shall  be  receivable  in  pay 
ment  of  all  loans  made  to  the  United  States,  and  of  all  taxes,  internal 
duties,  excises,  debts  and  demands  of  every  kind  due  to  the  United  States, 
except  duties  on  imports  and  interest,  and  of  all  claims  and  demands 
against  the  United  States,  except  for  interest  upon  bonds,  notes,  and  cer 
tificates  of  debt  or  deposit ;  and  shall  also  be  lawful  money  and  a  legal 
tender  in  payment  of  all  debts,  public  and  private,  within  the  United 
States,  except  duties  on  imports  and  interest,  as  aforesaid ;  and  any  holder 
of  said  United  States  notes,  depositing  any  sum  not  less  than  fifty  dollars, 
or  some  multiple  of  fifty  dollars,  with  the  Treasurer  of  the  United  States, 
or  either  of  the  assistant  treasurers,  shall  receive  in  exchange  therefor, 
duplicate  certificates  of  deposit,  one  of  which  may  be  transmitted  to  the 
Secretary  of  the  Treasury,  who  shall  thereupon  issue  to  the  holder  an 
equal  amount  of  the  bonds  of  the  United  States,  coupon  or  registered,  as 
may  by  said  holder  be  desired,  bearing  interest  at  the  rate  of  six  per  cent, 
per  annum,  payable  semi-annually,  and  redeemable  at  the  pleasure  of  the 
United  States  after  five  years,  and  payable  twenty  years  from  the  date 
thereof;  Provided,  Jwioever,  That  any  notes  issued  under  this  act  may  be 
paid  in  coin,  instead  of  being  received  in  exchange  for  certificates  of 


164 

deposit  as  above  specified,  at  the  discretion  of  the  Secretary  of  the  Treas 
ury.  And  the  Secretary  of  the  Treasury  may  exchange  for  such  notes,  on 
such  terms  as  he  shall  think  most  beneficial  to  the  public  interest,  any 
bonds  of  the  United  States  bearing  six  per  centum  interest,  and  redeema 
ble  after  five,  and  payable  in  twenty  years,  which  have  been  or  may  be 
lawfully  issued  under  the  provisions  of  any  existing  act;  may  re-issue  the 
notes  so  received  in  exchange ;  may  receive  and  cancel  any  notes  hereto 
fore  lawfully  issued  under  any  act  of  Congress,  and  in  lieu  thereof  issue 
an  equal  amount  in  notes  such  as  are  authorized  by  this  act;  and  may  pur 
chase,  at  rates  not  exceeding  that  of  the  current  market,  and  cost  of 
purchase  not  exceeding  one-eighth  of  one  per  centum,  any  bonds  or  cer 
tificates  of  debt  of  the  United  States  as  he  may  deem  advisable. 

SECTION  2.  And  be  it  further  enacted,  That  the  Secretary  of  the  Treasury 
be,  and  is  hereby,  authorized,  in  case  he  shall  think  it  expedient  to  pro 
cure  said  notes,  or  any  part  thereof,  to  be  engraved  and  printed  by  con 
tract,  to  cause  the  said  notes,  or  any  part  thereof,  to  be  engraved,  printed 
and  executed,  in  such  form  as  he  shall  prescribe,  at  the  Treasury  Depart 
ment  in  Washington,  and  under  his  direction;  and  he  is  hereby  empow 
ered  to  purchase  and  provide  all  the  machinery  and  materials,  and  to 
employ  such  persons  and  appoint  such  officers  as  may  be  necessary  for 
this  purpose. 

§  3.  And  be  it  farther  enacted,  That  the  limitation  upon  temporary 
deposits  of  United  States  notes  with  any  assistant  treasurer,  or  designated 
depositary  authorized  by  the  Secretary  of  the  Treasury  to  receive  such 
deposits,  to  fifty  millions  of  dollars  be,  and  is  hereby  repealed ;  and  the 
Secretary  of  the  Treasury  is  authorized  to  receive  such  deposits,  under 
such  regulations  as  he  may  prescribe,  to  such  amount  as  he  may  deem 
expedient,  not  exceeding  one  hundred  millions  of  dollars,  for  not  less 
than  thirty  days,  in  sums  not  less  than  one  hundred  dollars,  at  a  rate  of 
interest  not  exceeding  five  per  centum  per  annum ;  and  any  amount  so 
deposited  may  be  withdrawn  from  deposit,  at  any  time  after  ten  days 
notice,  on  the  return  of  the  certificate  of  deposit.  And  of  the  amount  of 
United  States  notes  authorized  by  this  act,  not  less  than  fifty  millions  of 
dollars  shall  be  reserved  for  the  purpose  of  securing  prompt  payment 
of  such  deposits  when  demanded,  and  shall  be  issued  and  used  only  when, 
in  the  judgment  of  the  Secretary  of  the  Treasury,  the  same,  or  any  part 
thereof  may  be  needed  for  that  purpose.  And  certificates  of  deposit  and 
of  indebtedness  issued  under  this  or  former  acts,  may  be  received  on  the 
same  terms  as  United  States  notes,  in  payment  for  bonds  redeemable  after 
five,  and  payable  in  twenty  years. 

§  4.  And  be  it  further  enacted,  That  the  Secretary  of  the  Treasury  may 
at  any  time,  until  otherwise  ordered  bjr  Congress,  and  under  the  restric 
tions  imposed  by  the  'Act  to  authorize  a  national  loan,  and  for  other 
purposes, '  borrow  on  the  credit  of  the  United  States,  such  part  of  the  sum 
of  two  hundred  and  fifty  millions  mentioned  in  said  act  as  may  not  have 
been  borrowed,  under  the  provisions  of  the  same,  within  twelve  months 
from  the  passage  thereof. 

$  5.  And  be  it  further  enacted,  That  any  part  of  the  appropriation  of  ten 
thousand  dollars  for  the  detection  and  bringing  to  trial  of  persons  engaged 
in  counterfeiting  the  coin  of  the  United  States,  made  by  the  act  entitled 
4  An  Act  making  appropriations  for  the  legislative,  executive  and  judicial 
expenses  of  the  Government,  for  the  year  ending  the  thirteenth  of  June, 
eighteen  hundred  and  sixty-one,'  approved  June  twenty-three,  eighteen 


165  — -   -a 

. 

hundred  and  sixty,  may  be  applied  in  detecting  and  bringing  toljrlal  and 
punishment,  persons  engaged  in  counterfeiting  Treasury  notes,  Ibnds,  or 
other  securites  of  the  United  States,  as  well  as  the  coin  of  thevJfmted 
States.  And  to  carry  into  effect  the  preceding  sections  of  this  ^ct  the 
sum  of  three  hundred  thousand  dollars  is  hereby  appropriated,  out 
money  in  the  Treasury  not  otherwise  appropriated. 

§  6.  And  be  it  further  enacted,  That  all  the  provisions  of  the  act  entitle 
'  An  Act  to  authorize  the  issue  of  United  States  notes,  and  for  the  redemp 
tion  or  funding  thereof,  and  for  funding  the  floating  debt  of  the  United 
States,'  approved  February  twenty-five,  eighteen  hundred  and  sixty-two, 
so  far  as  the  same  can  or  may  be  applied  to  the  provisions  of  this  act,  and 
not  inconsistent  therewith,  shall  apply  to  the  notes  hereby  authorized  to 
be  issued. 

Approved,  July  11,  1862.  A.  LINCOLN." 

POSTAGE    STAMPS    AND    FRACTIONAL    CURRENCY. 

Another  expedient  resorted  to  for  providing  means  to  carry  on 
the  war,  was  the  issue  of  postage  stamps  and  fractional  currencj^. 
After  the  suspension  of  specie  payments  bj'  the  banks  and  the 
passage  of  the  first  legal  tender  act,  gold  and  silver  were  in  a 
great  measure  banished  from  circulation.  There  was  a  great 
scarcity  of  small  change  in  ordinary  business  transactions.  Cor 
porations,  individuals  and  firms  commenced  issuing  shinplasters  to 
supply  the  deficienc}-.  It  soon  became  apparent  that  unless  some 
action  was  taken  to  prevent  it,  the  country  would  be  flooded  with 
a  heterogeneous  fractional  currency  of  very  little  value,  and  very 
vexatious  in  business  transactions. 

To  remedy  these  evils,  and  in  order  that  the  Government  might 
avail  itself  of  the  advantages  of  this  circulation,  Congress,  at  the 
request  of  Secretary  Chase,  passed  the  following  bill: 

CHAPTER  CXCVI. 

'  'An  Act  to  authorize  payment  in  Stamps,  and  to  prohibit  circulation  of  notes  of 
less  denomination  than  one  dollar. 

SECTION  1.  Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the 
United  States  of  America  in  Congress  assembled,  That  the  Secretary  of  the 
Treasury  be,  and  he  is  hereby  directed  to  furnish  to  the  Assistant  Treas 
urers,  and  such  designated  depositaries  of  the  United  States  as  may  be  by 
him  selected,  in  such  sums  as  he  may  deem  expedient,  the  postage  and 
other  stamps  of  the  United  States,  to  be  exchanged  by  them,  on  applica 
tion  for  United  States  notes :  and  from  and  after  the  first  day  of  August 
next  such  stamps  shall  be  receivable  in  payment  of  all  clues  to  the  United 
States  less  than  five  dollars,  and  shall  be  received  in  exchange  for  Uuited 
States  notes  when  presented  to  any  Assistant  Treasurer  or  any  designated 
depositary,  selected  as  aforesaid,  in  sums  not  less  than  five  Collars. 

$  2.  And  be  it  further  enacted,  That  from  and  after  the  first  day  of 
August,  eighteen  hundred  and  sixty-two,  no  private  corporation,  banking 
association,  firm  or  individual,  shall  make,  issue,  circulate,  or  pay  any 


166 

note,  check,  memorandum,  token,  or  other  obligation  for  any  less  sum 
than  one  dollar,  intended  to  circulate  as  money  or  to  be  received  or  used 
in  lieu  of  lawful  money  of  the  United  States;  and  every  person  so  offend 
ing  shall,  on  conviction  thereof  in  any  district  or  circuit  court  of  the 
United  States,  be  punished  by  fine  not  exceeding  five  hundred  dollars,  or 
by  imprisonment  not  exceeding  six  months,  or  by  both,  at  the  option  of 
the  Court. 
Approved  July  17,  1862.'' 

The  use  of  stamps  for  small  change  did  not  work  well  in  prac 
tice,  and  Secretary  Chase  recommended  that  fractional  currency 
should  be  authorized  in  the  place  of  postage  and  revenue  stamps. 
This  recommendation  was  carried  into  effect  by  the  4th  section  of 
the  act  of  March  3d,  1863,  by  which  the  Secretary  was  authorized 
to  issue  fractional  currency  to  any  amount  not  exceeding  $50,- 
000,000,  redeemable  in  United  States  notes  in  sums  not  less  than 
three  dollars,  and  receivable  for  postage  and  revenue  stamps,  and 
also  in  payment  of  any  dues  to  the  United  States  less  than  five 
dollars,  except  duties  on  imports.  This  fractional  currency  was 
not  made  a  legal  tender  for  private  debts,  but  upon  the  whole  it 
has  served  a  useful  purpose ;  and  the  second  section  of  the  act  of 
July  17,  1862,  prohibiting  all  other  shinplasters,  has  kept  the  coun 
try  free  from  a  flood  of  small  "  paper  trash,"  which  at  one  time 
was  very  annoying  to  the  business  community.  The  Government 
has  had  the  benefit  of  an  average  circulation  of  this  form  of  credit 
to  the  amount  of  about  $30,000,000,  which  is  still  outstanding, 
and  which  should  at  an  early  day  be  replaced  by  the  silver  coins 
which  were  in  common  use  before  the  war.  Would  it  not  be  well 
to  destroy  this  currency  as  fast  as  it  becomes  mutilated  and  is 
returned  to  the  Treasury  Department?  If  no  more  should  be 
printed  or  issued  it  would  not  be  long  before  the  present  issue 
would  wear  out  and  be  replaced  by  small  coins. 

SECOND  ANNUAL  REPORT  OF  SECRETARY  CHASE,  DEC.  4,  1862. 

Secretary  Chase  again  earnestly  recommended  the  National 
Currency  Bank  Bill,  and  urged  its  passage  by  additional  argu 
ments,  which  he  presented  more  in  detail  than  in  his  first  report. 

"He  still  adhered  to  the  opinion  expressed  in  his  last  report  that  a  circu 
lation  furnished  by  the  Government,  but  issued  by  banking  associations 
organized  under  a  general  act  of  Congress,  is  to  be  preferred  to  either 
United  States  legal  tender  notes  or  notes  of  State  Banking  Corporations. 
Such  a  circulation,  uniform  in  general  characteristics,  and  amply  secured 
as  to  prompt  convertibility  by  national  bonds  deposited  in  the  Treasury 
by  the  associations  receiving  it,  would  unite,  in  his  judgment,  more 
elements  of  soundness  and  utility  than  can  be  combined  in  any  other. 


167 

Little  direct  aid  is,  however,  to  be  expected  from  this  plan  during  the 
present,  nor  very  much,  perhaps,  during  the  next  year.  He  briefly  argued 
the  constitutionality  of  this  plan  as  an  auxiliary  to  the  power  to  borrow 
money ;  as  an  agency  of  the  power  to  collect  and  disburse  taxes ;  and  as 
an  exercise  of  the  power  to  regulate  commerce,  and  of  the  power  to  regu 
late  the  value  of  coin." 

He  recommended  a  further  limited  issue  of  legal  tender  notes 
as  a  wise  expedient  for  the  present  time,  and  as  an  occasional 
expedient  in  future  times,  and  the  immediate  passage  of  the  bank 
bill  for  raising  the  additional  means  to  carry  on  the  war. 


),  000, 000  LOAN  ACT. 

We  now  come  to  the  consideration  of  the  $900,000,000  Loan 
Act,  which,  in  connection  with  loan  acts  already  passed,  conferred 
more  discretionary  poicer  on  the  Secretary  of  the  Treasury  than 
was  ever  granted  by  law  to  any  other  Finance  Minister  in  the 
world;  and  which  ultimately  led  to  a  dangerous  expansion  of 
credit  circulation  in  various  forms,  and  in  connection  with  the 
bank  bill,  which  passed  about  the  same  time,  to  an  enormous 
inflation  of  prices,  caused  by  the  over-issuing  of  paper  mone}' 
which  came  very  near  proving  fatal  to  the  finances  of  the  Gov 
ernment  and  the  legitimate  business  of  the  country. 

The  bill  having  been  carefullj-  considered  in  the  Committee  of 
Ways  and  Means,  was,  on  the  8th  of  January,  1863,  reported  from 
the  Committee  to  the  House  by  Mr.  Stevens.  It  was  entitled, 
4  *  A  bill  to  provide  Ways  and  Means  for  the  support  of  the  Gov 
ernment;"  which  was  read  twice,  ordered  to  be  printed,  referred 
to  the  Committee  of  the  Whole,  and  made  the  special  order  for 
Monday,  the  12th  inst.  (House  bill  No.  659.)  The  bill  as 
reported  did  not  contain  some  provisions  which  Secretary  Chase 
was  very  anxious  to  have  passed — one  was  to  repeal  the  provision 

restricting  him  in  the  sale  of  bonds  to  the  'market  value' • 

another  was  to  abrogate  that  most  equitable  and  just  provision 
contained  in  the  original  legal  tender  act,  allowing  the  holders  of 
legal  tender  notes  to  convert  them  at  any  time  into  5-20  six  per 
cent,  bonds,  interest  payable  semi-annually  in  coin.  The  Com 
mittee  did  not  deem  it  just  to  abrogate  this  provision,  while  Sec- 
retarjr  Chase  believed  its  repeal  would  enable  him  to  make  better 
terms  in  selling  bonds.  « 

Mir.   SPAULDIXG'S  OPENING  SPEECH  ox  THE  KILL. 
On  the  12th,  the  bill  being  the  special  order,  was  taken  up  in 
Committee    of    the   Whole,    and,    an    amendment    having    been 


168 

offered  by  Mr.  Stevens,  Mr.  Spaulding  opened  the  debate  upon 
it  in  the  following  speech : 

"Mr.  CHAIRMAN — This  subject  is  a  very  dry  one,  but  it  is  intensely 
interesting  at  the  present  time.  I  propose  to  discuss  the  bill  reported  by 
the  Committee  of  Ways  and  Means,  with  the  amendment  of  the  gentle 
man  from  Pennsylvania,  so  far  as  I  shall  be  able  during  the  hour  allotted 
to  me  under  the  rules  of  the  House. 

The  immediate  requirements  of  the  Treasury  are  not  less  than  $100,000,- 
000.  Before  you  can  pass  this  bill  through  both  Houses,  have  it  approved 
by  the  President,  and  get  bonds  and  notes  engraved,  printed  and  issued, 
at  least  $50,000,000  more  will  be  required.  The  pressing  demands  upon  the 
Treasury  between  this  and  the  first  of  next  month,  for  the  pay  of  soldiers  and 
other  creditors,  may  le  put  down  at  $150,000,000.  The  gold  and  silver  in 
the  banks  in  New  York,  Boston  and  Philadelphia,  on  the  first  of  this 
month,  probably  did  not  exceed  $49,000,000;  to  which  you  may  add  the 
gold  and  silver  in  all  other  banks  in  all  the  loyal  States,  as  will  appear  in 
official  reports  to  the  first  ot  January,  1863,  and  the  whole  sum  will  not 
exceed  $87,000,000.  All  this  coin  is  necessary  for  the  banks  to  take  care 
of  their  own  liabilities ;  but  even  if  the  Secretary  could,  on  the  credit  of 
the  Government,  by  a  sale  of  bonds  at  any  sacrifice,  or  by  the  aid  of  the 
military  power,  visit  every  bank  in  the  country,  and  by  force  compel  all 
this  coin  to  be  paid  into  the  Treasury,  it  would  not  pay  fifty  cents  on  the 
dollar  on  the  demands  due  from  the  Government,  and  which  ought  to  be 
paid  in  the  next  twenty  days.  It  is  therefore  perfectly  plain  that  even 
the  smaU  sum  of  $150,000,000,  now  due,  cannot  be  paid  in  gold.  It  would 
be  a  gratification  to  me,  and,  I  doubt  not,  to  every  other  loyal  citizen,  if 
it  were  otherwise.  It  is  no  fault  of  the  Secretary  or  of  Congress  that  gold 
cannot  now  be  paid  to  the  soldiers  and  other  creditors.  It  is  simply  an  impos 
sibility,  by  any  plan,  to  get  enough  for  that  purpose.  There  was  never  a  more 
pertinent  application  of  the  old  maxim  than  when  applied  to  our  present 
condition,  *  when  we  cannot  do  as  we  would,  we  must  do  as  we  can.' 

I  have  had  a  strong  desire  to  provide  money  upon  a  specie  basis,  for  the 
support  of  the  army  and  navy,  during  the  pending  struggle  to  preserve 
the  Constitution  and  the  National  Union.  I  would  much  prefer  to  pay 
gold  and  silver  to  all  the  creditors  of  the  Government.  During  the  first 
six  months  of  the  war,  I  was  in  hopes  that  our  expenditures  might  be 
kept  writhin  limits  that  would  admit  of  such  a  financial  policy.  I  believe 
that  this  was  the  earnest  wish  of  the  Secretary  of  the  Treasury,  and  of 
every  member  of  the  Committee  of  Ways  and  Means.  But  with  an  army 
in  the  field  of  from  seven  hundred  thousand  to  one  million  of  men,  to  be 
fed,  clothed  and  paid,  and  all  the  material  of  war  provided  to  make  them 
efficient  for  active  duty,  it  was  very  soon  ascertained  that  the  coin  in  the 
country,  amounting  only  to  about  $250,000,000,  if  every  dollar  held  by 
the  banks  and  the  people  could  have  been  availed  of,  was  far  too  small  to 
meet  these  large  expenditures.  We  could  not  shut  our  eyes  to  the  vast- 
ness  of  the  volume  of  debt  that  was  open  before  us.  It  was  very  soon 
made  apparent  that  our  national  debt  would,  at  an  early  day,  reach 
$2,000,000,000,  equal  to  half  the  debt  of  Great  Britain;  and  that  it  would 
be  utterly  impossible  to  make  loans  on  a  specie  basis  fast  enough  to  meet 
such  enormous  expenditures. 

At  the  last  session,  and  after  there  had  been  a  general  suspension  of 
specie  payments  by  the  banks  and  the  Government,  Congress  authorized 


169 

the  issue  of  $150,000,000  of  legal  tender  notes;  and  by  another  law,  passed 
a  few  months  later  in  the  session,  an  additional  issue  of  $150,000,000  was 
also  authorized,  but  the  Secretary  was  required  to  hold  in  reserve  $50,000,- 
000  to  meet  any  calls  that  might  be  made  for  temporary  deposits  in  the 
sub-Treasury.  We  all  hoped  that  this  would  be  all  the  legal  tender  notes 
that  would  be  necessary.  Congress  also  authorized  the  Secretary  to  bor 
row  $500,000,000,  payable  in  twenty  years,  and  redeemable  at  the  pleasure 
of  the  Government  after  five  years,  bearing  interest  at  the  rate  of  six  per 
centum  per  annum,  payable  half-yearly  in  coin,  and  gave  Mm  authority  to 
sell  them  at  any  time  '•  at  the  market  price, '  to  raise  money  to  carry  an  the  war  ; 
and  further  authorized  the  holder  of  any  legal  tender  notes  to  convert  them  at 
any  time,  at  par,  into  these  six  per  cent,  bonds. 

The  Secretary  has  paid  out  nearly  $250,000,000  legal  tender  notes,  being- 
all  that  he  was  authorized  to  issue ;  and  notwithstanding  he  has  had  author 
ity  for  the  last  ten  months  to  sell  $500,000,000  of  five-twenty  six  per  cent,  bonds, 
at  the  market  price,  he  has  only  disposed  of  about  $25,000.000,  and  has  still 
authority  to  sell  $475,000,000  at  the  market  price,  and  take  his  pay  for  them  i?i 
legal  tender  notes. 

One  of  the  reasons  why  more  of  these  bonds  have  not  been  disposed  of 
is,  that  there  has  been  no  redundancy  of  currency,  and  it  has  been  diffi 
cult  for  the  Secretary  to  get  legal  tender  notes  on  a  sale  of  the  bonds  and 
geven-three-tenths  notes  that  he  has  alreadjr  negotiated. 

The  War  and  Xavy  Departments  have  almost  unlimited  power  to  con 
tract  debts  for  the  supply  of  the  army  and  navy.  The  volume  of  supplies 
and  supply  trains  for  your  army  are  enormously  large ;  and  extending 
over  such  a  widely  extended  field  of  military  operations  as  that  in  which 
our  several  army  corps  are  engaged,  no  one  can  fail  to  see  that  it  is  next 
to  impossible  to  estimate  accurately  the  amount  to  be  appropriated  for  a 
year  in  advance.  But  it  is  painfully  certain,  that  with  the  present  army 
in  the  field,  there  is  no  way  of  limiting  the  amount  of  expenditures  when 
they  are  actively  operating  to  put  down  so  gigantic  and  desperate  a 
rebellion. 

We  know  that  the  liquidated  and  funded  debt  is  already  large,  and  that 
there  is  a  large  accrued  indebtedness,  which  ought  to  be  paid  at  an  early 
day,  but  without  any  adequate  means  in  the  Treasury  to  pay  it.  There  is 
a  large  amount  due  to  the  soldiers  that  must  be  paid  at  the  earliest  moment  pos- 
sible.  The  soldiers  now  on  the  field  of  battle,  or  encamped  in  front  of  the  enemy, 
enduring  all  the  perils  and  hardships  of  war,  many  of  whom  have  not  received 
their  pay  for  months,  ought  not  to  be  put  off  any  longer.  They  can  hardly  be 
expected  to  perform  their  duties  with  alacrity,  unless  they  are  promptly 
paid,  especially  when  they  know,  as  many  of  them  do,  that  their  families 
at  home  are  suffering  for  the  want  of  the  means  of  life.  It  is  an  impera 
tive  necessity  that  the  means  for  paying  the  army  and  navy  should  not  be 
delayed  any  longer.  If  the  Secretary  cannot  raise  the  money  to  pay  the 
/  creditors  of  the  Government  by  a  loan  on  five-twenty  six  per  cent,  bonds 
»  at  the  market  price,  other  authority  must  be  given  him  to  raise  the 
money,  and  Congress  ought  to  confer  that  authority  upon  him  as  soon  as 
possible. 

The  time  has  arrived  when  our  finances  must  engage  the  earnest  and 
united  attention  of  all  loyal  Representatives.  We  were  in  great  peril  last 
year,  but  our  dangers  are  now  two-fold  what  they  were  then.  It  was 
very  difficult  last  year  to  provide  the  money  to  meet  the  large  appropria 
tions  made  for  the  support  of  the  army  and  navy.  It  will  be  still  more 


170 

difficult  to  meet  the  enlarged  requirements  of  the  current  and  the  next 
fiscal  year.  The  army  bill  alone  appropriates  over  $731,000,000,  which, 
added  to  the  estimates  of  all  the  other  expenditures  for  the  fiscal  year 
ending  June  30,  1864,  amount  to  the  enormous  sum  of  $1,095,431,183.56,  to 
which  must  be  added  the  amount  still  required  for  appropriations  and 
deficiency  for  the  year  ending  June  30,  1863,  and  which,  according  to  the 
report  of  the  Secretary  of  the  Treasury,  amounted  on  the  1st  of  December 
last  to  the  sum  of  $551,221,131.59,  making  the  whole  aggregate  required 
to  meet  appropriations  during  the  next  eighteen  months  $1,646,634,315.15, 

NATIONAL  DEBT.  ^ 

Particulars  of  the  public  debt  outstanding  January  2,  186|  : 

Loan  of  1842  in  course  of  payment  .......................  $  2,883,364  11 

"         1847  ..............................................  9,415,250  00 

"         1848  ...............................................  8,908,341  80 

1858  ...............................................  20,000,000  00 

1860  .......  .  .......................................  7,022,000  00 

1861,  act  of  February  8,  1860  ......................  18,415,000  00 

1861,  act  of  July  18,  1861  ..........................  50,002,000  00 

1862,  five-twenty  six  per  cent  .....................  25,  050,  850  00 

Texas  indemnity  ..........................................  3,461,000  00 

Oregon  war  debt  ..........................................  1,026,600  00 

Texas  debt  ................................................  112,092  69 

Old  funded  and  unfunded  debt  ..............  1  .............  114,115  48 

Treasury  notes  under  acts  prior  to  1857  ....................  104,561  64 

"                                subsequent  .....................  2,750,350  00 

Treasury  notes  seven-thirty  per  cent,  interest  .............  139.998,000  00 

Temporary  deposits  at  four  per  cent  ......................  38,458,008  50 

"               "             five  percent..  .....................  41,777,62816 

United  States  notes,  legal  tender  and  receivable  for  customs  14,913,315  25 

United  States  notes,  legal  tender  ..........................  223,108,000  00 

Postal  currency  less  than  one  dollar  .......................  6,844,936  00 

Certificates  of  indebtedness,  six  per  cent  ..................  110,321,241  65 

B:equisitions  on  the  Treasury  for  soldiers'  pay  and  other 

creditors,  due  but  not  paid  ............................  59,117,597  46 


Total  funded  and  unfunded  debt  to  January  2,  1863,  accord 

ing  to  the  books  in  the  Treasury  Department  ..........  783,804,252  64 

To  which  may  be  added  the  estimates  of  appropriations 
made  and  asked  for  to  July  1,  1864,  (including  $100,000,- 
000  that  may  be  undrawn  at  the  end  of  the  year,  and 
which  will  be  due  though  not  paid),  amounting  to,  say.  1,216,197,745  35 

Public  debt  estimated  to  July  1,  1864,  if  the  war  continues 

on  the  same  scale  to  that  time  ........................  $2,000,  000,000  00 

How  is  this  large  sum  to  be  obtained  ? 

The  Secretary  of  the  Treasury,  in  his  annual  report,  indicates  two 
modes  of  obtaining  it,  as  follows  : 

1.  A  national  bank  bill. 

2.  By  loans  in  some  of  the  forms  heretofore  authorized. 

I  propose  to  examine  these  modes  of  obtaining  the  money  in  the  order 
above  stated. 

1.  A  national  bank  law.  It  is  proposed  by  this  bill  to  authorize  the 
formation  of  banking  corporations  in  all  parts  of  the  country,  with  the 


171 

usual  powers  of  State  tanks.  They  are  to  have  the  power  to  issue  bank 
notes  to  circulate  as  money,  and  to  be  secured  by  United  States  stocks, 
deposited  in  the  Treasury  Department  as  security  for  the  redemption  of 
the  currency  thus  issued.  This  bill  in  all  its  essential  features  is  like  the 
free  banking  law  ot  the  State  of  Xew  York.  It  proposes  to  nationalize  all 
the  bank  currency  of  the  country  by  the  adoption  of  such  a  coercive  policy 
toward  existing;  banks  as  will  compel  them  to  throw  up  their  present 
State  charters,  and  organize  anew  under  this  bill.  A  tax  of  two  per  cent, 
per  annum  is  proposed  on  all  State  bank  circulation,  in  addition  to  the 
State,  county  and  city  taxes  which  State  banks  are  compelled  to  pay  under 
State  laws,  and  in  addition  to  the  internal  revenue  tax  of  three  per  cent. 
on  their  profit,  making  an  aggregate  tax  upon  State  banks  of  about  live 
per  cent.  By  this  hostile  policy  toward  existing  banks,  it  is  proposed  to 
compel  them  to  surrender  their  present  chartered  rights,  to  make  a  market 
for  United  States  stocks,  to  be  deposited  in  the  Treasury  Department  as  a 
basis  for  national  bank  circulation  under  this  new  system,  to  the  amount 
of  $250,000,000. 

It  is  anticipated  that  in  the  course  of  a  few  years,  and  certainly  as  soon 
as  the  system  goes  fully  into  operation,  United  States  bonds  will  be  depos 
ited  to  this  amount.  There  is  no  provision  requiring  new  banks,  organ 
ized  under  this  bill,  to  redeem  their  circulating  notes  in  coin.  They  arc 
to  remain  under  suspension  of  specie  payments,  the  same  as  existing 
banks,  until  there  is  a  general  resumption  on  the  part  of  the  Government 
and  the  banks,  long  after  the  close  of  the  war.  The  central  idea  of  the 
measure,  as  stated  in  the  Secretary's  report,  'is  the  establishment  of  one 
sound  uniform  currency,  of  equal  value  throughout  the  country,  upon  the 
foundation  of  national  credit,  combined  with  private  capital,'  and  making 
this  the  settled  financial  policy  of  the  country.  This  is  the  scheme  pro 
posed.  The  first  question  presented  is:  will  this  materially  aid  the  Gov 
ernment  in  the  present  exigency?  I  think  it  will  not,  and  the  Secretary 
frankly  admits  that  'little  direct  aid  is  to  be  expected  from  this  plan 
during  the  present,  and  not  very  much,  perhaps,  during  the  next  year.' 
We  have  already  issued,  and  put  into  circulation,  legal  tender  notes  direct 
from  the  Treasury,  and  without  the  machinery  or  expense  of  a  national 
bank,  to  about  the  sum  of  $250,000,000.  These  Treasury  notes  are  based, 
for  their  security  and  ultimate  redemption,  upon  the  good  faith  of  the 
people  and  all  their  property.  For  what  currency  we  need  in  the  pending 
struggle  for  national  existence,  will  it  be  wise  to  attack  the  State  banks  ? 
Will  it  be  wise  to  raise  up  powerful  enemies  in  the  States  to  oppose  any  of 
the  measures  of  the  Government?  The  State  bank  system  is  older  than 
the  Constitution.  It  has  become  deeply  rooted.  Immense  interests  are 
involved  in  the  banks  organized  all  over  the  country  under  the  protection 
and  guarantee  of  State  sovereignty.  Individuals  have,  in  good  faith,  paid 
in  their  money  to  establish  these  banks.  Vast  interests  are  involved  in 
various  ways.  They  are  intimately  interwoven  writh  the  commerce  and 
business  of  the  country.  In  the  State  of  New  York  alone  over  $19,000,- 
000  of  stocks  and  bonds,  many  of  which  have  been  purchased  from  the 
State  at  a  large  premium,  constitute  the  security  for  the  redemption  of 
their  circulating  notes.  The  State  of  Xew  York  has  now  the  best  banking 
system  in  the  world.  These  banks  are  under  much  more  careful  supervis 
ion,  of  a  superintendent  in  their  midst,  than  they  \vould  be  under  an 
officer  residing  as  far  off  as  Washington.  The  State  banks  have  been 
liberal  in  making  loans  to  the  Government  in  this  hour  of  the  nation's 


172 

greatest  need,  and  their  stockholders,  directors,  and  managers  are  mostly 
loyal  and  patriotic.  Still  further  aid  will  be  solicited  and  expected  from 
the  existing  banks.  Will  it  be  wise  to  make  demands  upon  them  that  are 
not  made  upon  all  other  property  ?  Any  invidious  discrimination  against 
them,  in  the  way  of  taxation,  it  seems  to  me,  would  be  unjust.  *  * 

I  am  not  opposed  to  a  national  bank,  nor  am  I  disposed  to  interfere  with 
State  banks.  Both  systems  of  banking  may  be  legitimate  within  their 
sphere  of  action.  I  am  willing  that  the  country  should  have  both.  I  am 
willing  that  they  should  go  on  pari  passu  and  in  competition  with  each 
other ;  but  I  am  unwilling  to  make  war  at  this  time  on  the  State  banks, 
because  I  do  not  believe  that  the  benefits  to  be  derived  from  such  a  course 
will  sufficiently  compensate  for  the  evils  that  will  follow  any  attempt  to 
destroy  the  present  State  bank  system. 

I  now  propose  to  examine  the  constitutionality  of  these  two  systems  of 
banking.  If  it  can  be  shown  that  a  national  bank  is  constitutional,  it  can 
be  more  clearly  established  that  State  banks  are  also  constitutional. 
Jackson,  Jefferson,  and  other  statesmen  always  insisted  that  the  Constitu 
tion  did  not  empower  Congress  to  charter  a  national  bank ;  and  the  former 
was  especially  favorable  to  State  banks.  (For  Mr.  Jefferson's  opinions 
Bee  his  letter  to  Hon.  John  W.  Eppes,  chairman  of  the  Finance  Committee, 
bearing  date  November  6,  1813,  wherein  he  opposes  the  charter  of  a 
United  States  bank.) 

CONSTITUTIONALITY  OF   A  NATIONAL  BANK. 

I  have  no  doubt  that  the  general  principle  of  the  national  bank  bill  pro 
posed  by  the  Secretary  of  the  Treasury  is  constitutional.  It  is  true  that 
there  is  no  express  grant  of  power  in  the  Constitution  to  incorporate  a 
United  States  bank.  The  power  to  create  a  bank  is  incidental  to  the  pow 
ers  expressly  granted.  The  national  bank  proposed  may  be  considered 
an  appropriate  means  to  carry  into  effect  many  of  the  enumerated  powers 
of  the  Government.  By  its  provisions  it  has  a  direct  relation  to  the 
national  debt,  to  the  power  of  collecting  taxes,  internal  duties  and  excises ; 
to  that  of  borrowing  money,  to  that  of  regulating  commerce  between  the 
States,  and  to  that  of  raising  money  to  maintain  the  army  and  navy.  It 
would,  no  doubt,  be  a  useful  instrument  in  administering  the  fiscal  and 
financial  operations  of  the  Government,  and  it  would  moreover,  in  time, 
be  a  useful  support  to  the  credit  of  the  Government,  by  providing  a  market 
for  a  considerable  amount  of  the  bonds  issued  in  the  prosecution  of  the 
war.  (See  Hamilton's  celebrated  argument  submitted  to  President  Wash 
ington,  in  favor  of  the  constitutionality  of  the  United  States  Bank,  in 
1791 ;  McCullock  vs.  The  State  of  Maryland,  4  Wheat.  R.  422-3,  Chief  Jus 
tice  Marshall's  opinion.) 

STATE  BANKS  ARE  ALSO  CONSTITUTIONAL. 

In  the  case  of  Briscoe  vs.  The  Bank  of  the  Commonwealth  of  Kentucky, 
(11  Peter's  R.,  317,)  Judge  McLean  laid  down  the  doctrine  that  a  State 
cannot  emit  bills  of  credit,  or,  in  other  words,  it  cannot  issue  that  descrip 
tion  of  paper,  to  answer  the  purposes  of  money,  which  was  denominated 
before  the  adoption  of  the  Constitution,  "bills  of  credit."  But  a  State 
may  grant  acts  of  incorporation  for  the  attainment  of  those  objects  which 
are  essential  to  the  interests  of  society.  This  power  is  incident  to  sover 
eignty;  and  there  is  no  limitation  in  the  Federal  Constitution  on  its 
exercise  by  the  States  in  respect  to  the  incorporation  of  banks. 

At  the  time  the  Constitution  was  adopted,  the  Bank  of  North  America 


173 

and  the  Massachusetts  bank  and  some  others  were  in  operation.  It  can 
not,  therefore,  be  supposed  that  the  notes  of  these  banks  were  intended  to 
be  inhibited  by  the  Constitution,  or  that  they  were  considered  bills  of 
credit,  within  the  meaning  of  that  instrument  In  fact,  in  many  of  their 
most  distinguishing  characteristics,  they  were  essentially  different  from 
bills  of  credit,  in  any  of  the  various  forms  in  which  they  were  issued. 

If,  then,  the  powers  not  delegated  to  the  Federal  Government  nor 
reserved  to  the  States  are  retained  by  the  States  or  the  people,  and,  by  a 
fair  construction  of  the  term  bills  of  credit,  as  used  in  the  Constitution, 
they  do  not  include  ordinary  bank  notes,  does  it  not  follow  that  the  power 
to  incorporate  banks  to  issue  these  notes  may  be  exercised  by  a  State  ? 

A  uniform  course  of  action,  involving  the  right  to  the  exercise  of  an 
important  power  by  the  State  government  for  three-fourths  of  a  century, 
and  this  almost  without  question,  is  no  unsatisfactory  evidence  that  the 
power  is  rightfully  exercised  to  charter  banks  to  issue  bank  notes  to  cir 
culate  as  money.  The  Supreme  Court  of  the  United  States  decided  in  this 
case  that  the  act  incorporating  the  Bank  of  the  Commonwealth  of  Ken 
tucky  was  a  constitutional  exercise  of  power  by  the  State  of  Kentucky ; 
and  the  notes  issued  by  the  bank  were  not  bills  of  credit,  within  the 
meaning  of  the  Constitution  of  the  United  States,  but  were  ordinary  bank 
bills,  issued  and  circulated  as  currency. 

It  was  argued  in  this  case  that  if  the  Bank  of  the  Commonwealth  of 
Kentucky  should  be  declared  unconstitutional  by  the  court,  all  State 
banks  founded  on  private  capital  would  be  unconstitutional.  Justice 
Story,  who  gave  a  dissenting  opinion  in  that  case,  denied  this  position, 
and  declared  that  the  States  may  create  banks  as  well  as  other  corporations 
upon  private  capital,  and,  so  far  as  the  prohibition  in  the  Federal  Consti 
tution  is  concerned,  may  rightfully  authorize  them  to  issue  bank  bills  or 
notes  as  currency.  The  Constitution  does  not  prohibit  the  emission  of  all 
bills  of  credit,  but  only  the  emission  of  bills  of  credit  by  a  State;  and  when 
I  say  by  a  State,  I  mean  by  or  in  behalf  of  a  State  in  whatever  form  issued. 
It  does  not  prohibit  private  persons,  or  private  partnerships,  or  private 
corporations,  (strictly  so  called,)  from  issuing  bills  of  credit. 

In  the  case  of  Darrington  vs.  The  State  Bank  of  Alabama,  (13  Howard 
Reports,  12,)  the  Supreme  Court  of  the  United  States  decided  that  the  bills 
of  a  banking  corporation,  which  has  corporate  property,  are  not  bills  of 
credit  within  the  meaning  of  the  Constitution,  although  the  State  which 
created  the  bank  is  the  only  stockholder,  and  pledges  its  faith  for  the  ulti 
mate  redemption  of  the  bills. 

It  must  not  be  understood  from  anything  I  have  said,  that  I  am  in  favor 
of  an  expansion  of  the  circulation  of  existing  banks.  On  the  contrary,  I 
am  opposed  to  it.  The  existing  banks  should  be  kept  under  close  super 
vision;  and  for  all  increase  in  their  circulation,  since  they  suspended 
specie  payments,  I  am  entirely  willing  that  some  policy  should  be 
adopted  by  the  States  or  General  Government  to  prevent  them  from 
inflating  the  currency.  I  am  willing  that  a  tax  of  two  per  cent,  should 
be  levied  on  all  their  increase  of  circulation  since  the  first  of  January, 
1862.  This  would  be  a  tax  on  their  abuse  of  chartered  privileges,  and  not 
a  blow  aimed  at  the  total  destruction  of  all  banks  alike,  good  and  bad. 
What  I  oppose  is  an  attempt  on  the  part  of  Congress  to  destroy  the  vested 
rights  of  citizens,  which  they  hold  under  the  guarantee  of  State  sover 
eignty,  and  which  are  to  be  protected  as  sacredly  as  any  other  chartered 
rights  or  property  held  under  State  laws.  Let  all  property  be  taxed  as* 


174 

nearly  equal  as  possible,  leaving  no  just  cause  for  complaint  from  any 
class  of  citizens. 

Having  shown  that  the  proposed  national  bank  bill  is  not  only  unjust 
in  some  of  its  provisions,  but  that  it  will  not  yield  any  considerable 
amount  of  money  to  meet  the  appropriations  for  the  current  and  next 
fiscal  year,  the  other  question  to  be  considered  is : 

2.  Can  the  money  be  obtained  by  loans  ?  It  will  be  recollected  that 
the  amount  to  be  provided  for,  over  and  above  the  sums  to  be  realized 
from  duties  on  imports  and  internal  revenue,  exceeds  the  sum  of  $1,000,- 
000,000.  This  is  a  large  sum  to  be  borrowed  in  the  ensuing  eighteen 
months.  As  I  have  before  stated,  over  $2,500,000  will  be  required  every 
day,  Sundays  included,  between  this  and  the  first  day  of  July  next.  The 
receipts  from  postal  currency,  customs  and  taxes  during  that  time  will 
not  probably  exceed  the  sum  of  $600,000  per  day,  leaving  $1,900,000  to  be 
obtained  daily  in  some  form  by  loan.  Congress,  by  its  legislation  at  the 
last  session,  has,  to  a  considerable  extent,  changed  the  standard  of  value 
for  all  business  operations  within  the  United  States. 

The  standard  of  value  fixed  by  Congress  is  legal  tender  Treasury  notes, 
convertible  at  any  time  into  United  States  specie-paying  bonds,  bearing 
interest  at  the  rate  of  six  per  centum  per  annum,  payable  half-yearly  in 
coin,  based  upon  adequate  taxation  upon  the  entire  property  of  the  coun 
try.  Legal  tender  notes  constitute  the  national  currency  now  established 
by  law.  All  exchanges  of  property,  all  contracts,  and  all  loans,  are  based 
upon  the  value  of  legal  tender  notes  and  United  States  six  per  cent, 
bonds.  The  law  of  Congress  declares  that  these  notes  shall  be  lawful 
money,  and  a  legal  tender  in  payment  of  all  debts,  public  and  private. 

The  Secretarjr  states  in  his  Annual  Eeport  that  previous  to  the  first  of 
November,  1862,  'the  coin  had  been  practically  demonetized  and  with 
drawn  from  use  as  currency,  or  as  a  basis  for  currency.'  *  *  *  * 
*  That  on  the  suspension  of  specie  payments,  and  the  substitution  for  coin 
of  United  States  notes,  convertible  into  six  per  cent,  specie-paying  bonds, 
as  the  legal  standard  of  value,  gold  became  an  article  of  merchandise, 
subject  to  the  ordinary  fluctuations  of  supply  and  demand,  and  to  the 
extraordinary  fluctuations  of  mere  speculation.' 

Gold  does  not  circulate  at  all  as  currency,  and  there  is  no  probability 
that  it  will  circulate  as  money  for  several  years  to  come — certainly  not 
during  the  progress  of  this  gigantic  war  to  put  down  the  rebellion.  This 
is  to  be  regretted,  but  it  cannot  be  avoided.  We  have  the  monster  rebel 
lion  by  the  ears,  like  the  backwoodsman  \vho  held  the  ferocious  wolf— if 
we  let  go,  he  will  destroy  us ;  we  must  therefore  hold  on  till  we  subdue 
him.  No  compromise  can  be  made.  The  rebels  will  not  negotiate  on 
any  basis  except  that  of  separation  and  an  acknowledgment  of  their  inde 
pendence.  The  war,  therefore,  must  go  on.  While  the  war  lasts  the 
magnitude  of  the  expenses  will  be  so  great  that  there  is  not  coin  enough 
in  the  country  to  carry  it  on  with  gold  and  silver.  It  cannot  be  obtained. 
We  must  try  to  mitigate,  as  far  as  we  can,  the  evils  growing  out  of  the 
necessity  of  making  legal  tender  notes  the  standard  of  value. 

You  cannot  dispose  of  your  twenty  years  six  per  cent,  bonds  for  gold  without 
submitting  to  a  loss  of  over  thirty  cents  on  every  dollar ;  in  other  words,  for  every 
dollar  of  bonds  issued  you  can  only  get  seventy  cents  in  gold.  Even  if  you  should 
be  willing  to  submit  to  this  sacrifice,  it  is  not  at  all  probable  that  you  could  nego 
tiate  $25,000,000  of  bonds  for  gold  before  you  would  be  obliged  to  submit  to  a  sac 
rifice  of  fifty  cents  on  every  dollar  sold.  Not  because  your  bonds  are  not  good, 


175 

dollar  for  dollar,  as  gold,  but  because  the  whole  amount  of  gold  in  the 
country  that  could  be  had  for  circulation  does  not  probably  exceed  $250,- 
000,000.  Not  a  sufficient  sum  to  carry  on  the  immense  operations  of  the 
people  and  the  Government  at  this  time,  even  if  it  could  all  be  brought 
out  and  put  into  circulation — a  thing  wholly  impracticable  at  this  time. 
No  one  at  all  acquainted  with  monetary  affairs  believes  that  we  can  make 
sale  of  any  considerable  amount  of  our  six  per  cent,  bonds  at  over  fifty 
cents  on  the  dollar  for  goid— a  sacrifice  too  great  for  this  House  to 
seriously  consider,  if  any  other  mode  can  be  devised  which  is  practicable. 
It  is  believed  to  be  practically  impossible  to  negotiate  your  bonds  for  gold 
without  too  great  a  sacrifice.  If  you  cannot  negotiate  loans  for  gold,  will 
it  be  wise  to  change  the  independent  Treasury  law  so  as  to  allow  loans  to 
be  negotiated  for  notes  of  suspended  banks  ?  There  was  a  general  suspen 
sion  of  specie  payments  by  the  banks  and  the  Government  on  the  31st  of 
December,  1861.  In  February  following,  Congress  passed  the  law  for  the 
issue  of  legal  tender  notes,  and  authorized  the  Secretary  to  make  loans, 
and  receive  these  notes  in  payment ;  but  the  Government  has  not  deemed 
it  best  to  take  suspended  bank  notes  in  payment  for  loans  or  any  other 
dues  to  the  Government.  I  do  not  think  it  wise  to  adopt  that  policy  at 
this  time.  The  question  then  arises,  can  you  sell  bonds  enough  every  day 
and  get  your  pay  for  them  in  legal  tender  notes  already  issued  ?  It  is  per 
fectly  apparent  to  all  who  are  acquainted  with  the  money  market  that  this 
cannot  be  done.  Currency  has  been  scarce  all  the  time  for  the  last  eight 
months,  an  is  now  very  difficult  to  be  obtained  in  sufficient  quantity  to 
meet  the  business  wants  of  the  country.  In  many  places  through  the 
interior  of  the  States,  bankers  and  business  men  have  been  obliged  to  pay 
as  high  as  one-quarter  and  one-half  per  cent,  premium  to  get  currency 
(bank  bills  and  greenbacks)  to  carry  on  ordinary  business  operations. 

It  is  well  known  that  all  the  New  England  and  New  York  country 
banks  redeem  their  bills  now  at  the  Suffolk  Bank,  Boston,  and  the  Metro 
politan  Bank,  New  York,  precisely  as  they  did  before  the  suspension  of 
specie  payments.  This  system  checks  any  tendency  to  over  issue,  and  is 
a  touchstone  by  which  to  test  daily  the  demand  for  bank  bills.  If  they 
are  not  needed  for  legitimate  business,  they  flow  in  rapidly  to  the  redeem 
ing  banks,  but  if  they  are  wanted  they  stay  out.  This  test  is  unerring. 
The  daily  redemptions,  for  months  past,  have  not  been  half  what  they 
were  when  the  volume  of  bank  circulation  was  less  by  a  third  than  it  is  at 
this  time.  What  causes  this  scarcity  of  currency  ?  In  the  first  place,  as 
before  stated,  gold  and  silver  no  longer  circulate  as  currency  within  the 
United  States.  Gold  is  only  required  to  settle  foreign  balances,  pay 
custom  duties  and  interest  on  the  public  debt.  It  is  bought  and  sold  for 
these  purposes  as  a  commodity,  but  it  does  not  circulate  as  money  in 
ordinary  business  operations.  Its  place  is  supplied  by  bank  bills  and  legal 
tender  notes.  In  the  next  place,  the  large  increase  of  business  suddenly  created 
ly  'such  a  gigantic  "war  as  we  are  now  prosecuting,  has  largely  increased  the 
demand  for  a  larger  volume  oj  currency  than  was  ever  required  before. 

There  has  been  a  large  demand  for  currency  in  the  western  States  to 
purchase  and  bring  forward  the  immense  crops  that  have  been  produced 
during  the  last  two  years.  The  winding  up  of  a  large  number  of  badly 
organized  and  badly  managed  banks  in  those  States  left  a  large  vacuum  to 
be  filled  by  bills  of  solvent  banks  and  legal  tender  notes.  The  Govern 
ment  has  been  buying  largely,  in  all  parts  of  the  country,  food,  clothing, 
and  all  munitions  of  war,  beside  the  large  sums  required  for  pay  and 


176 

bounty  money  of  the  volunteer  soldiers  that  have  gone  forth  from  all  the 
States.  No  doubt  considerable  amounts  of  this  money  still  remain  in  the 
hands  of  the  soldiers  themselves  and  their  families,  practically  withdrawn 
from  circulation  for  the  time  being.  Fifty,  one  hundred,  and  as  high, 
even,  as  two  hundred  dollars,  were  paid  for  volunteers  to  fill  up  the  two 
last  calls  made  by  the  President.  Fifty  dollars  paid  to  each  soldier,  to 
the  number  of  six  hundred  thousand,  would  require  $30,000,000  to  say 
nothing  of  the  amounts  required  for  the  army  previously  sent  into  the 
field.  It  is  perfectly  plain  where  the  currency  has  gone  during  the  past 
six  months.  The  operations  of  the  army  and  navy  alone  have  required  in  all 
forms,  not  less  than  $200,000,000  in  bank  bills  and  legal  tender  notes.  It  is  no 
wonder  that  currency  has  been  scarce  in  all  the  ordinary  channels  of  trade  and 
business.  It  is  still  very  scarce  and  difficult  to  be  obtained  for  ordinary 
business  purposes  in  New  York  and  all  the  western  States.  I  am  assured 
by  bankers  and  the  best,  financiers  in  New  York,  that  if  the  Secretary 
should  put  on  the  market  a  proposal  for  a  loan  of  $50,000,000  it  could  not 
be  taken,  for  the  reason  that  the  legal  tender  notes  could  not  be  obtained 
in  sufficient  quantity  to  pay  for  a  loan  of  that  amount.  It  is  doubtful 
whether  a  loan  of  $15,000,000  could  be  taken  at  this  time  for  the  want  of 
currency  to  pay  for  it. 

It  is  also  very  difficult  for  the  collectors  of  internal  revenue  to  make  col 
lections  on  account  of  the  scarcity  of  legal  tender  notes.  Legal  tender 
notes  are  not  plenty  among  the  people  who  are  required  to  pay  your  taxes ; 
they  are  continually  asking  for  more.  Why,  then,  should  we  be  alarmed 
at  a  further  issue  of  legal  tender  notes  ?  So  long  as  they  are  wanted  by 
the  business  of  the  country,  demanded  by  the  soldiers  for  their  pay, 
begged  for  by  all  the  needy  creditors  of  the  Government,  surely  Congress 
ought  not  to  hesitate  in  an  exigency  like  the  present. 

It  is  no  time  now  to  depress  business  operations,  or  hold  back  the  pay 
due  to  honest  creditors  of  the  Government.  It  is  much  better  to  stimulate, 
make  money  plenty,  make  it  easy  for  people  to  pay  their  taxes,  and  easy 
for  Government  to  make  loans.  This  is  the  only  way  in  which  we  can  go 
on  in  the  present  imperiled  condition  of  the  country. 

During  the  last  war  with  Great  Britain,  Jefferson,  in  letters  written 
during  that  period,  repeatedly  urged  upon  the  Government  the  propriety 
of  issuing  Treasury  notes  of  convenient  denominations  to  circulate  as 
money.  In  his  letters  to  John  W.  Eppes,  chairman  of  the  Finance  Com 
mittee,  under  dates  of  June  24  and  September  11,  1813,  he  urged  upon 
Congress  the  importance  of  issuing  Treasury  notes  whenever  loans  could 
not  be  made  upon  satisfactory  terms.  In  one  of  his  letters,  bearing  date 
October  15, 1814,  he  says :  *  I  never  did  believe  you  could  have  gone  beyond 
a  first  and  second  loan — not  from  want  of  confidence  in  the  public  faith, 
which  is  perfectly  sound,  but  from  a  want  of  disposable  funds  in  individ 
uals.  The  circulating  fund  is  the  only  one  we  can  command  with  cer 
tainty.  It  is  sufficient  for  all  our  wants ;  and  the  impossibility  of  defending 
the  country  without  its  aid  as  a  borrowing  fund  renders  it  indispensable 
that  the  nation  should  take  and  keep  it  in  their  own  hands.'  He  admitted 
that  the  issue  of  Treasury  notes  would  banish  gold  and  silver  from  circu 
lation,  and  in  another  letter  adds :  '  In  such  a  nation  there  is  one  and  only 
one  resource  for  loans,  sufficient  to  carry  them  through  the  expenses  of 
a  war;  and  that  will  always  be  sufficient,  and  in  the  power  of  an  honest 
Government,  punctual  in  the  preservation  of  its  faith.  The  fund  I  mean 
is  the  mass  of  circulating  coin.  Every  one  knows  that,  although  not  liter- 


177 

ally,  it  is  true  that  every  paper  dollar  emitted  banishes  a  silver  one  from 
circulation.  A  nation,  therefore,  making  its  purchases  and  payments  with 
bills  fitted  for  circulation,  thrusts  an  equal  sum  of  coin  out  of  circulation. 
This  is  equivalent  to  borrowing  that  sum;  and  yet,  the  vendor  receiving 
payment  in  a  medium  as  effectual  as  coin  for  his  purchases  or  payments, 
has  no  claim  to  interest.  And  so  the  nation  may  continue  to  issue  its  bills* 
as  far  as  its  wants  require,  and  the  limits  of  the  circulation  will  admit.' 

So  it  will  be  seen  that  Jefferson,  so  far  from  regarding  it  as  an  evil  that 
coin  should  be  banished  from  circulation  during  war,  regarded  it  as  a 
great  advantage ;  because  the  Government  would  then  be  able  to  circu 
late  its  own  notes,  without  interest,  in  place  of  the  coin  of  individuals. 
Treasury  notes  issued  by  the  Government,  he  regarded  as  a  loan  from  the 
people,  without  interest,  and  the  only  available  resource  in  time  of  Avar. 

He  urged  ample  taxation  as  a  basis  for  Government  paper  issue,  and 
adds :  '  That  during  the  interval  between  Avar  and  AArar,  all  the  outstanding 
paper  should  be  called  in,  coin  be  permitted  to  flow  in  again,  and  hold  the 
field  of  circulation  until  another  Avar  should  require  its  yielding  place  again 
to  the  national  medium.'  An  essential  feature  of  the  financial  plan  adopted 
last  year  was  the  passage  of  the  tariff  and  internal  revenue  laAvs.  It  Avas 
of  great  consequence  that  our  public  debt  should  rest  upon  a  solid  founda 
tion.  The  property  of  the  country,  liable  to  taxation,  amounted  in  1860 
to  OA*er  $16,000,000,000,  and  Congress  having  ample  power  to  tax  it  to  the 
full  amount  necessary  to  pay  all  Government  debts,  it  Avas  agreed  by  all 
parties  that  it  Avas  necessary  to  impose  taxes  upon  this  property,  and  the 
profits  of  business  based  thereon,  in  various  forms,  for  an  amount  sufficient 
to  pay  the  ordinary  expenses  of  the  Government  on  a  peace  footing,  and 
all  the  interest  01  the  extraordinary  Avar  debt.  The  ordinary  expenses  of 
the  Government  in  time  of  peace  do  not  exceed  $75,000,000,  and  the  inter 
est  on  the  Avar  debt  Avill  not  probably  exceed  during  the  next  year  the 
sum  of  $45,000,000,  Avhile  it  is  believed  that  the  revenues  derived  from  the 
tariff  and  internal  revenue  Avill  not  be  less  than  $200,000,000,  leaving  $80,- 
000,000  as  a  sinking  fund  to  keep  doAvn  the  war  debt.  It  is  believed  that 
the  revenue  realized  on  the  present  tariff  and  tax  laAV  will  pay  ordinary 
current  expenses  of  the  Government,  and  interest  on  the  Avar  debt  Avhen 
it  reaches  $2,000,000,000,  Avhich  is  only  half  the  present  debt  of  Great 
Britain.  *  *  ********** 

Upon  a  full  examination  of  the  AA'hole  subject,  and  Avith  a  deep  solicitude 
for  the  success  of  the  measures  that  may  be  finally  adopted  by  Congress, 
I  see  no  AATay  in  which  the  AArays  and  means  can  be  obtained  to  carry  on 
the  GoArernment  for  the  next  eighteen  months,  except  by  a  continuance 
of  the  measures  adopted  at  the  last  session,  and  Avhich  have  so  successfully 
carried  us  through  the  perils  of  the  last  year,  Avith  such  additions  and 
modifications  as  experience  has  shown  to  be  necessary. 

An  additional  section  has  been  proposed  to  the  financial  plan  adopted 
last  year.  There  is  a  large  amount  of  available  means  in  the  country, 
Avhich,  if  it  can  be  drawn  into  the  national  Treasury,  Avill  be  of  most 
essential  service  at  this  time.  It  has  been  the  subject  of  much  considera 
tion  as  to  the  best  form  in  AArhich  it  could  be  offered  to  the  people  to  induce 
them  to  let  the  Government  haAre  the  money  for  Avhich  they  have  no 
present  use,  and  be  allowed  a  fair  compensation  for  its  use  during  the 
time  it  is  borrowed  by  the  GoA'ernment.  Interest  bearing  Treasury  notes 
are  believed  to  be  the  best  form  in  which  it  can  be  offered  to  the  public. 


178 

INTEREST-BEARING  TREASURY  NOTES 

Under  the  operation  of  this  new  section,  these  interest-bearing-  Treasury 
notes  and  the  legal  tender  notes  would  be  convertible  and  reconvertible 
into  each  other  at  the  will  of  the  holder;  and  as  both  can  be  paid  out  to 
the  creditors  of  the  Government,  they  will  soon  find  their  way  into  all  the 
channels  of  business  in  all  parts  of  the  country.  The  interest-bearing 
notes  will  be  laid  aside,  out  of  circulation,  better  than  gold  as  an  invest 
ment,  because  yielding  a  fair  rate  of  interest ;  while  the  legal  tender  notes 
will  continue  to  circulate  as  money.  The  object  of  this  section  is  to  reach 
the  money  invested  in  temporary  loans,  in  all  the  cities,  villages  and  towns 
throughout  the  country,  and  apply  it  to  sustain  the  Government  at  this 
time.  A  large  amount  of  money  is  now  held  by  individuals  and  corpora 
tions,  bearing  a  small  rate  of  interest,  or  no  interest  at  all,  which 
is  on  deposit  in  banks  or  in  private  safes  and  drawers,  waiting  a 
good  opportunity  for  permanent  investment  in  the  purchase  of  stocks, 
mortgages,  or  other  property.  Forehanded  farmers,  mechanics,  man 
ufacturers,  merchants,  and  even  retired  capitalists  would  like  some 
convenient  mode  of  investing  their  surplus  means  at  fair  rates  of  inter 
est,  and  with  a  certainty  that  when  a  good  opportunity  is  presented 
to  make  some  business  transaction  they  can  have  legal  tender  notes 
returned  to  them  to  use  as  money.  Notes  issued  at  six  per  cent, 
interest,  and  in  denominations  of  $20,  $50,  $100,  $200,  $500,  $1,000,  $2,000 
and  $5,000  w^ould  be  in  a  convenient  form  for  all  classes;  and  at  this  rate 
of  interest  there  is  no  doubt  that  large  amounts  would  be  drawn  into  the 
Treasury.  Savings  banks,  trust  companies,  and  other  places  of  deposit, 
now  overburdened  with  money,  would,  no  doubt,  have  drawn  from  them 
considerable  amounts  for  investment  in  these  interest-bearing  notes. 
Guardians,  executors,  and  trustees  would  largely  invest  their  money  in 
these  Government  securities.  Insurance  companies  might  invest  in  them, 
get  six  per  cent,  interest,  and  be  sure,  in  cases  of  loss,  to  get  legal  tender 
notes  with  which  to  pay  their  outstanding  policies.  Even  savings  banks 
and  trust  companies  might  invest  a  part  of  their  funds  in  these  notes,  and 
be  able  to  respond  when  their  depositors  should  call  for  their  money. 
The  operations  under  this  section  would  be  like  deposits  in  banks,  and  it 
is  very  probable  that  $300,000,000  might  be  reached  in  a  reasonable  time. 
It  would  be,  in  fact,  a  national  savings  bank,  so  arranged  that  its  benefits 
can  be  extended  to  all,  wThile,  at  the  same  time,  the  Government  would 
be  able  to  realize  a  large  amount  of  money  to  aid  in  the  prosecution  of 
the  war.  Some  would  draw  out  their  funds  from  time  to  time,  as  occa 
sions  should  arise  for  business  operations,  while  others  again  would  invest 
in  new  notes  issued  under  the  authority  to  re-issue  them ;  and  the  average 
amount  in  the  Treasury  would  be  about  the  same  from  week  to  week. 
The  average  deposits  in  the  banks  in  the  city  of  Kew  York  are  about  the 
game.  Their  weekly  published  statements  show  that  there  is  no  great 
variation  in  the  amount  for  weeks  and  months. 

I  was  in  favor  of  giving  to  them  the  highest  legal  sanction  and  the  most 
desirable  character  possible,  within  the  power  of  the  Government,  not 
above  six  per  cent,  interest,  in  order  to  prevent  their  depreciation.  It 
would  have  cost  so  little  to  have  given  them  this  most  desirable  character 
of  immediate  convertibility,  that  I  strongly  urged  its  adoption,  and  upon 
the  same  principle  that  I  urged  the  legal  tender  clause  last  year.  The 
more  desirable  the  notes  are  as  an  investment,  the  longer  they  would  stay 
out,  and  the  higher  would  be  their  price  in  the  market.  I  trust,  however, 


179 

that,  in  their  present  shape,  they  will  be  sought  after,  and  be  a  valuable 
aid  to  the  people  in  the  payment  of  internal  revenue,  and  materially  assist 
the  Secretary  in  the  arduous  duties  of  furnishing  the  means  for  a  vigorous 
prosecution  of  the  war. 

In  nearly  all  the  plans  that  have  been  submitted  to  the  committee  for  providing 
means  to  carry  on  the  Government  for  the  next  eighteen  months,  it  has  been  pro 
posed  to  issue  more  legal  tender  notes,  if  the  exigencies  of  the  service  shall  render 
a  further  issue  necessary.  The  Secretary  of  the  Treasury,  in  submitting  the 
bill  proposed  by  him  for  a  loan  of  $900,000,000,  says:  'The  committee  will 
observe  that  the  provision  in  respect  to  loans  is  very  general.  Under  it 
the  Secretary  will  have  the  power  to  borrow  money  in  any  of  the  ordinary 
forms,  or,  if  exigencies  require,  to  make  additional  issues  of  United  States 
notes.'  I  have  an  aversion  to  any  considerable  further  issue  of  legal  ten 
der  notes,  and  can  only  consent  to  it  as  an  imperative  necessity.  I  think 
too  large  an  issue  will  tend  to  innate  prices;  but  I  do  not  see  how  it  can 
be  avoided.  I  do  not  see  how  the  soldiers  are  to  be  paid,  or  how  the  Gov* 
ernment  can  be  carried  on,  in  any  other  way.  I  shall  therefore  vote  for 
this  provision,  in  connection  with  the  other  provisions  of  the  bill,  as  a 
necessary  measure  to  enable  the  Government  to  prosecute  the  war. 

OUR  ONLY  HOPE  OP  RESTORING  THE  UNION  IS  IN  MILITARY  SUCCESS. 

Sir,  since  the  first  gun  was  fired  on  Fort  Sumter,  my  conviction  has 
been  deep  and  abiding  that  this  was  to  be  a  long,  expensive,  bloody, 
and  desperate  conflict;  and  that  it  would  be  very  difficult  to  determine  in 
advance  what  results  would  flow  from  such  a  deadly  encounter.  I  have 
never  for  a  moment  doubted  that  the  leading  conspirators  meant  to  estab 
lish  and  maintain  a  separate  government,  and  a  total  separation  from  the 
free  States.  This  has  been  their  deliberate  purpose  from  the  beginning. 
Nearly  two  years  of  concerted  action,  embittered  by  the  most  deadly  con 
flict  with  the  armed  power  of  this  Government,  has  consolidated  their 
strength.  They  have  organized  a  form  of  civil  government,  under  a 
constitution,  with  Jefferson  Davis  as  President  for  six  years,  who  is  sur 
rounded  by  a  cabinet,  congress,  judiciary,  and  all  other  officers  nec-os^ary 
to  keep  it  in  full  operation.  This  rebel  government  has  organized  and 
maintained  a  powerful  army,  which  has  been  able  thus  far  to  successfully 
repulse  every  attempt  that  has  been  made  on  our  part  to  take  their  capltol, 
distant  only  one  hundred  and  twenty-five  miles  from  the  Hall  in  which 
we  are  now  sitting. 

Sir,  I  never  believed,  and  do  not  now  believe,  that  the  cabal  at  .Rich 
mond,  the  only  responsible  power  to  which  overtures  of  peace  can  be 
made,  will  listen  to  any  offers  of  compromise,  however  liberal,  which  will 
induce  them  to  throw  up  their  present  de  facto  government,  come  back 
into  the  Union,  and  submit  to  the  constitutional  Government  over  which 
Abraham  Lincoln  presides,  or  any  other  President  that  can  be  elected  by 
the  loyal  people  of  the  United  States.  Jefferson  Davis  and  all  the  high 
officers  about  him  are  men  of  high  political  aspirations.  Inordinate  ambi 
tion,  and  a  desire  to  rule,  were  the  chief  motives  that  prompted  them  to 
rebel  against  the  Constitution  and  Government  they  had  sworn  to  support. 
Those  who  suppose  that  Mr.  Davis  and  his  co-conspirators  ^-ill  voluntarily 
negotiate  to  surrender  the  power  they  now  hold,  have  but  little  apprecia 
tion  of  the  motives  that  stimulate  them  to  so  desperate  and  determined 
action.  These  desperate  men  are  in  earnest,  and  wrill  fight  to  the  death. 
They  are  men  of  ability,  fighting  for  power,  for  empire,  and  will  neither 
compromise  nor  surrender  unless  they  are  compelled  to  do  so  at  the  point 


180 

of  the  bayonet,  pressed  forward  by  an  overwhelming  and  crushing  force. 
They  must  be  whipped,  badly  whipped,  before  they  will  compromise  or 
surrender.  Any  expectation  to  the  contrary  is  not  only  fallacious,  but 
mischievous  in  its  consequences,  because  it  divides  and  weakens  the  people 
in  the  loyal  States,  and  prolongs  the  war. 

Sir,  I  have  no  expectation  that  this  rebellion  will  be  crushed  in  many 
years  unless  there  is  a  more  united  and  a  more  determined  effort  on  the 
part  of  the  people  in  the  northern  States.  The  great  fact  to  be  ascertained 
by  all  doubting  men  is  will  Jefferson  Davis  compromise  on  any  terms 
short  of  a  separation  ?  Will  he  voluntarily  surrender  the  power  he  now 
holds  ?  Will  he  receive  any  proposal  for  peace  except  on  the  terms  of 
dividing  the  old  Union,  and  a  recognition  of  his  government  over  the 
soutfiern  half.  For  myself,  I  have  no  desire  to  compromise,  and  no  pro 
posals  to  make  to  Mr.  Davis  or  any  of  his  cabinet ;  but  those  who  do  wish 
to  make  peace  with  the  rebel  government  ought  to  submit  their  proposi 
tions  at  once,  so  that  all  compromisers  may  know  what  to  do.  If  no  com 
promise  can  be  made  with  the  rebel  government,  short  of  dissolving  the 
Union,  it  should  be  known  at  the  earliest  moment  possible,  so  that  all 
doubters  and  cavilers  may  decide  immediately  what  they  will  do.  The 
daily  expenses  of  the  war  are  enormous.  The  public  debt  is  running  up 
at  a  fearful  rate.  This  war  ought  not  to  be  procrastinated  a  day  longer 
by  divisions  at  home.  This  state  of  things  cannot  be  continued  for  any 
considerable  length  of  time,  without  entailing  a  public  debt  so  large  that 
it  will  burden  present  and  future  generations.  The  best  blood  of  the 
nation  flows  freely.  Large  numbers  are  killed  in  battle,  but  more  die 
from  exposure  and  disease  than  in  any  other  \vay. 

Sir,  all  this  blood  and  treasure  is  given  freely  to  crush  the  rebellion  and 
maintain  the  Union.  Why  have  we  not  been  more  successful?  It  is 
because  we  need  more  earnestness,  greater  determination  manifested, 
better  discipline  in  the  army,  and  a  closer  unity  of  action.  Unless  these 
essential  requisites  can  be  had,  and  that  speedily,  I  have  very  little  hope 
of  crushing  the  rebellion.  The  way  to  secure  a  permanent  peace  is,  first 
of  all,  to  annihilate  the  rebel  forces.  The  army  between  Washington  and 
Richmond  must  be  beaten.  The  power  of  the  rebel  government  is  in 
their  army.  If  they  can  maintain  their  military  strength,  their  govern 
ment  will  be  perpetuated.  If  we  cannot  achieve  decisive  victories  over 
the  rebel  forces,  the  Union  is  lost.  The  Union  is  priceless ;  it  ought  to  be 
maintained,  and  it  will  be  maintained  if  all  citizens  rise  above  party  and 
perform  their  whole  duty  to  the  country.  The  people,  our  commanding 
generals,  Congress,  and  the  Executive,  ought  all,  without  regard  to  party 
distinctions,  to  rouse  up  to  the  magnitude  and  perils  of  the  crisis,  and  by 
unity  of  action  put  forth  an  earnest  and  determined  effort  to  crush  the  rebel 
armies.  Xo  compromise  can  be  made  or  ought  to  be  made.  Our  only 
hope  is  in  military  success.  This  is  the  only  way  in  which  we  can  main 
tain  our  finances,  and  restore  the  national  Union. 

$100,000,000    LEGAL    TENDER    NOTES    REQUIRED    TO    PAY    THE    ARMY 

AND    NAVY. 

There  was  a  large  amount  due  to  the  army  and  navy,  and  com 
plaints  were  being  made  in  consequence  of  the  delay  in  making 
payments.  The  subject  was  discussed  by  the  Military  Commit 
tees  of  the  Senate  and  House.  A  resolution  passed  the  House  as 
follows : 


181 

"WHEREAS,  Grevious  delays  happen  in  the  payment  of  money  due 
soldiers;  therefore,  in  order  to  ascertain  if  any,  and  what,  legislation 
may  be  necessary  to  remedy  such  delays, 

Resolved,  That  the  Secretary  of  the  Treasury  be  requested  to  furnish  to 
this  House  the  reasons  why  requisitions  of  paymasters  in  the  army  are 
not  promptly  filled." 

The  Secretary  made  answer  as  follows : 

"  N"o  one  can  feel  a  deeper  regret  than  the  Secretary  that  a  single  Amer 
ican  soldier  lacks  a  single  dollar  of  his  pay,  and  no  effort  of  his  has  been 
wanting  to  prevent  such  a  condition.  It  is  not  in  his  power,  however,  to 
arrest  the  accumulation  of  demands  upon  the  Treasury  beyond  the  pos-  tx' 
sibility  of  provision  for  them  under  existing  legislation."  *  *  *  * 
"The  Secretary,  solicitous  to  regulate  his  action  by  the  spirit  as  well  as 
the  letter  of  the  legislation  of  Congress,  did  not  consider  himself  at 
liberty  to  make  sales  of  the  5-20  bonds  below  the  market  value ;  and  sales 
except  below  were  impracticable." 

SPEECH   OF    MR.     GURLEY. 

Mr.  GURLEY,  of  Ohio,  spoke  of  the  great  importance  of  our 
financial  measures. 

"The  Government  which  can  raise  the  largest  amount  of  money  must, 
in  the  end,  triumph ;  that  a  large  army  was  essential  to  success,  but  the 
most  essential  thing  was  money  or  money  means.  He  did  not  agree  with 
the  Secretary  in  several  things  contained  in  his  reports;  the  banking 
scheme,  which  the  Secretary  admits  would  not  afford  any  immediate  relief, 
should  be  rejected ;  we  need  a  sensible,  practicable  plan  that  will  furnish 
immediate  means  to  pay  the  army  and  navy.  He  insisted  that  Congress, 
by  the  act  of  February  25,  1862,  authorized  the  Secretary  to  sell  $500,000,- 
000  six  per  cent.  5-20  bonds  at  'the  market  value  thereof,'  which  he  had 
not  done,  as  intended  by  Congress,  and  the  consequence  was  that  the  soldiers 
and  sailors  were  not  paid,  as  they  ought  to  have  been  before  this  time. 
Of  course  we  do  not  call  in  question  the  motives  of  the  Secretary,  or  deny 
his  good  intentions,  but  when  the  Secretary  says,  in  his  reply  to  the  reso 
lution  of  the  House,  that  he  had  no  authority,  he  was  evidently  mistaken 
in  his  construction  of  the  law.  The  words  'market  value  '  do  not  mean 
par  value,  nor  at  any  specified  time  or  sum.  The  market  value  was  the 
price  they  would  bring  when  offered  in  the  market.  There  has  been  no  busi 
ness  day  or  week  since  the  law  was  passed,  when  any  of  the  many  agents 
of  the  Secretary  in  Xew  York  could  not  have  placed  one  million,  or 
several  millions,  in  the  market,  and  sold  them  somewhere  near  par,  to 
raise  money  to  pay  the  army  and  navy." 

A  joint  resolution  was  proposed  that  provision  ought  to  be 
made  immediately  by  the  Treasury  Department  to  pay  the  sums 
due  the  soldiers  and  sailors,  and  that  a  preference  should  be 
given  to  this  class  of  creditors.  Secretary  Chase  was  consulted 
on  the  subject,  and  in  a  letter  dated  January  7,  1863,  addressed 
to  the  Finance  Committee,  he  stated  that  the  amount  then  due 
to  the  army  and  navy  was  about  $60,000,000,  and  that  provision 
ought  to  be  made  for  immediate  payment.  He  thought  the  tern- 


182 

porary  measure  proposed  might  answer  for  present  purposes,  and 
concluded  his  letter  as  follows : 

"It  should  be  regarded,  however,  only  as  an  expedient  for  an  emergency. 

No  measure,  in  my  judgment,  will  meet  the  necessities  of  the  occasion,  and  prove 
adequate  to  the  provision  of  the  great  sums  required  for  the  suppression  of  the 
rebellion,  which  does  not  include  a  firm  support  to  public  credit  through  the  estab~ 
lishment  of  a  uniform  national  circulation,  secured  by  bonds  of  the  United 
States.  The  joint  resolution  and  amendment  are  herewith  returned. 

With  great  respect,  vours.  etc., 

S.  P.  CHASE, 
Secretary  of  the  Treasury. 
Hon.  WILLIAM  P.  FESSENDEN, 

Chairman  Com.  on  Finance,  U.  S.  Senate." 

After  some  disagreement  between  the  Finance  Committee  of 
the  Senate  and  the  Committee  of  Ways  and  Means  of  the  House 
as  to  the  right  of  the  Senate  to  initiate  a  bill  of  this  kind,  a  joint 
resolution  was  passed  by  the  House  and  concurred  in  by  the  Sen 
ate,  by  yeas  38,  nays  2 ;  as  follows : 

Yeas — Messrs.  Anthony,  Arnold,  Browning,  Chandler,  Clark, 
Collamer,  Davis,  Dixon,  Doolittle,  Fessenden,  Foot,  Foster, 
Hale,  Harding,  Harlan,  Harris,  Henderson,  Howard,  Howe,  King, 
Lane  (of  Indiana),  Lane  (of  Kansas),  Latham,  McDougall,  Mor- 
rill,  Nesmith,  Kice,  Sherman,  Sumner,  Ten  Eyck,  Trumbull, 
Wade,  Wilkinson,  Willey,  Wilmot,  Wilson  (of  Massachusetts), 
Wilson  (of  Missouri)  and  Wright — 38. 

ftfays — Messrs.  Powell  and  Saulsbury — 2. 

So  the  joint  resolution  was  passed,  and  is  as  follows: 

[PUBLIC  RESOLUTION— Xo.  4.] 

"Joint  Resolution  to  provide  for  the  immediate  payment  of  the  army  and 
navy  of  the  United  States. 

WHEREAS,  It  is  deemed  expedient  to  make  immediate  provision  for  the 
payment  of  the  army  and  navy ;  therefore 

Be  it  resolved  by  the  Senate  and  House  of  Representatives  of  the  United 
States  of  America,  in  Congress  assembled,  That  the  Secretary  of  the  Treas 
ury  be,  and  he  is  hereby  authorized,  if  required  by  the  exigencies  of  the 
public  service,  to  issue  on  the  credit  of  the  United  States  the  sum  of  one 
hundred  millions  of  dollars  of  United  States  notes,  in  such  form  as  he 
may  deem  expedient,  not  bearing  interest,  payable  to  bearer  on  demand, 
and  of  such  denominations,  not  less  than  one  dollar,  as  he  may  prescribe, 
which  notes  so  issued  shall  be  lawful  money  and  a  legal  tender,  like  the 
similar  notes  heretofore  authorized,  in  payment  of  all  debts,  public  and 
private,  within  the  United  States,  except  for  duties  on  imports  and  Inter 
est  on  the  public  debt ;  and  the  notes  so  issued  shall  be  part  of  the  amount 
provided  for  in  any  bill  now  pending  for  the  issue  of  Treasury  notes,  or 
that  may  be  passed  hereafter  by  this  Congress. 

Approved  January  17,  1863." 


183 

MESSAGE    OF    PRESIDENT    LINCOLN. 

The^Speaker  laid  before  the  House  the  following  message,  in 
writing,  from  the  President  of  the  United  States : 
"  To  the  Senate  and  House  of  Representatives: 

I  have  signed  the  joint  resolution  to  provide  for  the  immediate  payment 
of  the  army  and  navy  of  the  United  States,  passed  by  the  House  of  Repre 
sentatives  on  the  14th,  and  "by  the  Senate  on  the  15th  inst. 

The  joint  resolution  is  a  simple  authority,  amounting,  however,  under 
existing  circumstances,  to  a  direction  to  the  Secretary  of  the  Treasury  to 
make  an  additional  issue  of  $100,000,000  in  United  States  notes,  if  so  much 
money  is  needed,  for  the  payment  of  the  army  and  navy. 

My  approval  is  given  in  order  that  every  possible  facility  may  be 
afforded  for  the  prompt  discharge  of  all  arrears  of  pay  due  to  our  soldiers 
and  our  sailors. 

While  giving  this  approval,  however,  I  think  it  my  duty  to  express  my 
sincere  regret  that  it  has  been  found  necessary  to  authorize  so  large  an 
additional  issue  of  United  States  notes,  when  this  circulation  and  that  of 
the  suspended  banks  together  have  become  already  so  redundant  as  to  {/ 
increase  prices  beyond  real  values,  thereby  augmenting  the  cost  of  living 
to  the  injury  of  labor,  and  the  cost  of  supplies  to  the  injury  of  the  whole 
country. 

It  seems  very  plain  that  continued  issues  of  United  States  notes,  without 
any  check  to  the  issues  of  suspended  banks,  and  without  adequate  provis 
ion  for  the  raising  of  money  by  loans,  and  for  funding  the  issues  so  as  to 
keep  them  within  due  limits,  must  soon  produce  disastrous  consequences. 
And  this  matter  appears  to  me  so  important  that  I  feel  bound  to  avail 
myself  of  this  occasion  to  ask  the  special  attention  of  Congress  to  it. 

That  Congress  has  power  to  regulate^  the  currency  of  the  country  can  hardly 
admit  of  a  doiCbt;  and  that  a  judicious  measure  to  prevent  the  deterioration 
of  this  currency  by  a  reasonable  taxation  of  bank  circulation,  or  otherwise, 
is  needed,  seems  equally  clear.  Independently  of  this  general  considera 
tion,  it  would  be  unjust  to  the  people  at  large  to  exempt  banks,  enjoying 
the  special  privilege  of  circulation,  from  their  just  proportion  of  the  public 
burdens. 

In  order  to  raise  money  by  loans  most  easily  and  cheaply,  it  is  clearly 
necessary  to  give  every  possible  support  to  the  public  credit.  To  that 
end  a  uniform  currency,  in  which  taxes,  subscriptions  and  loans,  and  all 
other  ordinary  public  dues,  as  well  as  all  private  dues  may  be  paid,  is 
almost,  if  not  quite,  indispensable.  Such  a  currency  can  be  furnished  by 
banking  associations,  organized  under  a  general  act  of  Congress,  as  sug 
gested  in  my  message  at  the  beginning  of  the  present  session.  The 
security  of  this  circulation,  by  the  pledge  of  United  States  bonds,  as 
therein  suggested,  would  still  further  facilitate  loans  by  increasing  the 
present  and  causing  a  future  demand  for  such  bonds. 

In  view  of  the  actual  financial  embarrassments  of  the  Government,  and 
of  the  greater  embarrassments  sure  to  come,  if  the  necessary  means  of 
relief  be  not  afforded,  I  feel  that  I  should  not  perform  my  duty  by  a  simple 
announcement  of  my  approval  of  the  joint  resolution,  which  proposes 
relief  only  by  increasing  circulation,  without  expressing  my  earnest  desire 
that  measures,  such  in  substance  as  those  I  have  just  referred  to,  may 
receive  the  early  sanction  of  Congress.  By  such  measures,  in  my  opinion, 
will  payment  be  most  certainly  secured,  not  only  to  the  army  and  navy, 


184 

but  to  all  honest  creditors  of  the  Government,  and  satisfactory  provision 
made  for  future  demands  on  the  Treasury. 
January  17,  1863.  ABRAHAM  LIXCOKNV' 

SPEECH    OF    MR.     MORRILL. 

"Mr.  MORRILL,  of  Vermont,  said  we  had  often  been  called  upon  during 
this  Congress  to  furnish  means  to  carry  on  the  war.  The  figures  now  are 
larger  than  ever  before,  being  $900,000,000,  and  if  the  war  should  be  pro 
longed  to  July  1,  1864,  it  is  believed  not  to  be  too  much.  He  was  con 
strained  now  to  give  his  vote  for  this  measure,  although  such  as  in  the 
outset  he  did  not  support,  and  never  should  have  countenanced  as  an 
original  proposition,  because  he  knew  of  no  other  so  efficient  for  imme 
diate  relief  to  the  Treasury,  and  so  safe  to  adopt.  He  should  hold  his 
opposition  to  legal  tender  in  abeyance,  so  far  as  to  allow  money  for  the 
army  and  navy  to  be  raised  in  this  way,  if  it  could  be  raised  in  no  other. 
He  was  willing  to  restrain  excessive  issues  of  State  Bank  circulation  by  a 
proper  tax,  but  did  not  think  it  best  at  this  time  to  engage  in  a  struggle 
for  its  extinction. 

He  was  opposed  to  the  national  lank  bill  which  he  said  was  urged  with 
great  zeal  and  ability  by  the  Secretary  of  the  Treasury,  and  gave  his 
reasons  at  length  why,  in  his  opinion,  it  ought  not  to  pass.  The  new 
plan,  fully  executed,  would  obtain  very  little  if  any  more  aid  from  the 
banks  than  is  already  secured,  and  the  Treasury  at  last,  would  find  itself 
in  actual  possession  of  no  more  than  a  new  dollar  for  an  old  one.  The 
Secretary  admits  in  his  annual  report  that  l  little  direct  aid  is,  however,  to  le 
expected  from  this  plan  during  the  present,  nor  very  much,  perhaps,  during  the 
next  year.' "' 

MR.   WARD'S  SPEECH. 

Mr.  WARD,  of  New  York,  made  an  elaborate  speech  on  the 
Finances  and  the  currency. 

"The  condition  of  our  financial  affairs  and  the  regulation  of  the  circula 
ting  medium  are  regarded  with  much  anxiety  by  the  people  of  this  coun 
try,  from  motives  of  their  own  personal  interest,  and  yet  more  from 
patriotic  devotion  to  the  cause  of  unity  in  our  great  struggle  for  national 
existence.  He  was  desirous  of  supporting  the  Government  of  his  country 
in  a  vigorous  prosecution  of  the  war,  but  was  opposed  to  the  legal  tender 
principle  and  voted  against  it.  My  earnest  desire  is,  and  always  has  been, 
to  furnish  the  Government  with  every  resource  and  power  necessary  to 
the  suppression  of  the  rebellion.  From  my  solicitude  for  the  re-establish 
ment  of  the  Republic,  I  desire  to  avert  any  increase  of  such  paper  money, 
as  is  now  in  use,  knowing  how  injuriously  it  affects  public  confidence, 
enlarges  expenditures  by  raising  prices,  lulls  the  public  mind  into  false 
security,  and  lessens  the  vigilance  which  prevents  frauds.  He  expressed 
himself  in  favor  of  a  commission  composed  of  the  most  wise  and  dis 
tinguished  bankers  and  commercial  men  in  co-operation  with  the  Secretary 
to  inquire  into  the  best  method  of  arranging  our  financial  affairs." 

SPEECH    OF    MR.     WALKER. 

Mr.  AMASA  WALKER,  of  Massachusetts,  made  a  well  considered 
speech  in  favor  of  the  general  provisions  of  the  bill. 
"He  maintained  that  the  vast  expenditures  involved  in  the  prosecution 


185 

of  the  war  could  not  be  raised  except  upon  the  credit  of  the  Government. 
No  ordinary  means  of  raising  revenue  were  sufficient  to  meet  a  great 
emergency  like  the  present.  The  bill  before  us  proposes  measures  of 
finance,  currency  and  taxation.  1.  An  issue  of  bonds.  2.  An  issue  of 
interest-bearing  circulating  notes,  receivable  for  all  Government  dues, 
except  customs.  3.  An  issue  of  legal  tender  notes,  known  in  common 
parlance  as  greenbacks.  4.  The  issue  of  fractional  parts  of  a  dollar,  to 
take  the  place  of  postal  currency  now  in  use.  5.  Provides  for  deposits  of 
bullion  in  the  public  Treasury  ad  libitum.  6.  To  tax  the  banks  of  circula 
tion.  7.  A  proposition  that  the  public  funds  may  be  deposited  in  these 
same  banks,  at  the  discretion  of  the  Secretary  of  the  Treasury. 

He  did  not  approve  of  paying  interest  in  coin  on  the  bonds,  it  has 
already  exerted  a  pernicious  influence  on  the  public  funds.  He  was  in 
favor  of  the  greenback  circulation,  and  in  favor  of  a  six  per  cent,  tax  on 
State  bank  circulation,  in  order  to  drive  it  out,  so  as  to  give  place  to  the 
national  circulation.  He  urged  adequate  taxation  to  sustain  the  public 
credit,  and  thought  that  these  measures  had  become  a  stern  military 
necessity,  and  indispensable  to  a  successful  prosecution  of  the  war. 

On  the  16th  inst.  Mr.  Hooper  offered  a  substitute  for  the  bill, 
which  was  ordered  to  be  printed.  This  substitute  will  be  found 
printed  at  length  in  the  Cong.  Globe,  p.  382. 

After  a  long  discussion,  in  which  different  members  of  the 
House  participated,  a  vote  was  taken  on  the  23d  inst.  by  tellers, 
in  Committee  of  the  AVliole,  on  Mr.  Hooper's  substitute — ayes 
32,  noes  67;  so  the  substitute  was  lost.  Several  minor  amend 
ments  were  however  made  to  the  original  bill,  and  on  the  26th 
inst.  a  vote  was  taken  in  the  House  on  the  substitute  offered  by 
Mr.  Stevens,  and  it  was  decided  in  the  negative — yeas  37,  nays 
91.  The  bill  as  amended  was  then  passed  without  a  division, 
and  sent  to  the  Senate  for  concurrence. 

On  the  13th  of  February  the  bill,  after  being  amended,  passed 
the  Senate  by  the  following  A^ote : 

Yeas — Messrs.  Anthony,  Arnold,  Chandler,  Clark,  Collamer, 
Cowan,  Davis,  Dixon,  Doolittle,  Fessenden,  Foot,  Foster,  Grimes, 
Harlan,  Harris,  Henderson,  Hicks,  Howard,  Howe,  King,  Lane 
(of  Indiana),  Lane  (of  Kansas),  Morrill,  Nesmith,  Pomeroy,  Rice, 
Sherman,  Simmer,  Ten  Eyck,  Wade,  Wilkinson  and  Wilson  (of 
Massachusetts) — 32. 

Nays — Messrs.  Carlisle,  Powell,  Richardson  and  Wall — 4. 

So  the  bill  was  passed. 

Three  several  Conference  Committees  were  appointed  on  the 
disagreeing  votes  between  the  two  Houses.  A  compromise  was 
finally  made  on  the  section  taxing  State  bank  circulation.  All 
the  amendments  were  finally  agreed  to,  and  the  bill  passed. 


186 

SYNOPSIS  OF  $900,000,000  LOAN  ACT. 

' '  The  act  to  provide  Ways  and  Means  for  the  support  of  the  Govern 
ment.     Approved  March  3,  1863." 

1.  The  first  section  authorized  a  loan  of  $300,000,000  for  the 
then  current  year,  and  $600,000,000  for  the  then  next  fiscal  year, 
and  to  issue  bonds  therefor  at  not  less  than  ten  nor  more  than 
forty  years,  at  not  exceeding  six  per  cent,  interest,  in  coin,  not 
exceeding  in  all  $900,000,000. 

2.  By  section  second  of  the  same  act  the  Secretary,  in  lieu  of 
an  equal  amount  of  said  bonds,  was  authorized  to  issue  $400,000,- 
000  of  Treasury  notes,  bearing  interest  not  exceeding  six  per 
cent.,  payable  in  lawful  money,  which  notes,  payable  at  periods 
expressed  on  their  face,  might  be  made  a  legal  tender  at  their  face 
value. 

3.  By   the  third  section    $150,000,000    in   amount  of  United 
States  notes,  made  a  legal  tender,  might  be  issued.     The  restric 
tion  in  the  sale  of  bonds  to  l market  value9  was  repealed.      '  And  the 
holders  of  United  States  notes  issued  under  former  acts,  shall  present  the 
same  for  the  purpose  of  exchanging  them  for  bonds  as  therein  provided, 
on  or  before  the  first  of  July,  1863,  and  thereafter  the  right  to  exchange 
the  same  shall  cease  and  determine. ' 

7.  This  section  imposed  a  tax  of  one  per  cent,  each  half  year, 
on  a  graduated  scale  of  State  bank  circulation,  according  to  the 
capital  stock  of  each  bank. 

BANK    BILL    PASSED. 

On  the  2d  February,  1863,  the  National  Currency  Bank  bill,  as 
prepared  by  Mr.  Spaulding,  in  December,  1861,  after  being  altered 
and  amended  in  several  important  particulars,  was  reported  from 
the  Finance  Committee  to  the  Senate  by  John  Sherman  of  Ohio. 
The  debate  upon  it  was  opened  on  the  9th,  and  continued  from 
day  to  day  until  the  12th,  when  it  was  passed  by  the  following 
vote — yeas  23,  nays  21,  as  follows: 

Yeas — Messrs.  Anthony,  Arnold,  Chandler,  Clark,  Doolittle, 
Fessenden,  Foster,  Harding,  Harlan,  Harris,  Howard,  Howe, 
Lane  (of  Kansas),  Merrill,  Nesmith,  Pomeroy,  Sherman,  Sumner, 
Ten  Ej'-ck,  Wade,  Wilkinson,  Wilmot,  and  Wilson  (of  Massa 
chusetts) — 23.  ^  _^ 

Nays- — Messrs.  Carlisle,  Collamer,  Cowan,  Davis,  Dixon,  Foot, 
Grimes,  Henderson,  Hicks,  Kennedy,  King,  Latham,  McDougal,  • 


187 

Powell,  Rice,  Richardson,  Saulsbury,  Trumbull,  Turpie,  Wall  and 
Wilson  (of  Missouri) — 21. 

So  the  bill  was  passed. 

The  bill  as  it  passed  the  Senate  was  sent  to  the  House  on  the 
13th.  On  motion  of  Mr.  Hooper  it  was  ordered  to  be  printed, 
but  was  not  referred  to  the  Committee  of  Ways  and  Means.  It 
remained  on  the  Speaker's  table  until  the  19th,  when  it  was  taken 
up  for  consideration  in  the  House.  A  motion  to  refer  it  to  the 
Committee  of  the  Whole  having  been  defeated,  Mr.  Spaulding 
opened  the  debate  in  a  lengthy  speech  in  favor  of  the  bill,  which 
will  be  found  in  the  Appendix.  The  debate  continued  until  the 
20th,  when  the  bill  was  passed  without  amendment  by  the  follow 
ing  vote — yeas  78,  nays  64,  as  follows: 

Yeas — Messrs.  Aldrich,  Alley,  Ashley,  Babbitt,  Beaman,  Bing- 
hain,  Jacob  B.  Blair,  Blake,  Buffinton,  Calvert,  Campbell,  Casey, 
Chamberlain,  Clements,  Colfax,  Conway,  Covode,  Cutler,  Davis, 
Delano,  Dunn,  Edgerton,  Eliot,  Ely,  Fenton,  Samuel  C.  Fessen- 
den,  Thomas  A.  D.  Fessenden,  Fisher,  Frank,  Goodwin,  Granger, 
Hahn,  Haight,  Hickinan,  Hooper,  Hatching,  Julian,  Kelley,  Fran 
cis  W.  Kellogg,  William  Kellogg,  Lansing,  Leary,  Lovejoy,  Law, 
Mclndoe,  McKean,  McPherson,  Marston,  Maynard,  Moorhead, 
Anson  P.  Morrill,  Noell,  Olin,  Patton,  Timothy  G.  Phelps,  Potter, 
Alexander  H.  Rice,  John  H.  Rice,  Sargent,  Sedgwick,  Segar, 
Shanks,  Shellabarger,  Sherman,  Sloan,  Spaulding,  Stevens,  Trim 
ble,  Trowbridge,  Van  Horn,  Van  Wyck,  Verree,  Wall,  Wallace, 
Wtishburne,  Albert  S.  White,  Windom  and  Worcester — Y8. 

Nays — Messrs.  William  Allen,  Ancona,  Baily,  Baker,  Baxter, 
Biddle,  Cobb,  Frederick  A.  Conkling,  Roscoe  Conkling,  Cox, 
Cravens,  Crittenden,  Dawes,  Edwards,  English,  Gooch,  Grider, 
Gurley,  Hall,  Harding,  Harrison,  Holman,  Horton,  Johnson, 
Kerrigan,  Knapp,  Law,  Lazear,  Loomis,  Mallory,  May,  Menzies, 
Justin  S.  Morrill,  Morris,  Nixon,  Noble,  Norton,  Nugen,  Odell, 
Pendleton,  Perry,  Pike,  Pomeroy,  Porter,  Price,  Robinson,  James 
S.  Rollins,  Sheffield,  Shiel,  John  B.  Steele,  William  G.  Steele, 
Stiles,  Stratton,  Benjamin  F.  Thomas,  Francis  Thomas,  Vallan- 
digham,  Wadsworth,  Wheeler,  Whaley,  Chilton  A.  White,  Wick- 
liffe,  Wilson,  Woodruff  and  Wright— 64. 

£rS<>  the  bill  was  passed  and   approved  by  President  Lincoln, 
/fe*pf25,  1863. 

No  National  Bank  currency  was  issued  until  about  the  first  of 
January,  1864.  After  that  time  it  was  gradually  issued.  On  the 


188 

first  of  July,  1864,  the  sum  of  $25,825,695  had  been  issued;  and 
on  the  22d  of  April,  1865,  shortly  after  the  surrender  of  General 
Lee,  the  whole  amount  of  National  Bank  circulation  issued  to  that 
time,  was  only  $146,927,975.  It  will  therefore  be  seen  that  com 
paratively  little  direct  aid  was  realized  from  this  currency  until 
after  the  close  of  the  war.  All  the  channels  of  circulation  ivere  well 
filled  up  ivith  the  greenback  notes,  compound  interest  notes,  and  certifi 
cates  of  indebtedness,  to  the  amount  of  over  $700,000,000,  before  the 
National  Bank  act  got  fairly  into  operation.  This  Bank  issue  was  in 
fact  an  additional  inflation  of  the  currency. 

THE  RIGHT  TO  CONVERT  NOTES  INTO  BONDS  ABROGATED. 

The  first  legal  tender  notes  were  issued  bearing  date  March  10, 
1862,  and  on  the  back  of  them  was  printed  these  words: 

"This  note  is  a  legal  tender  for  all  debts,  public  and  private,  except 
duties  on  imports  and  interest  on  the  public  debt,  and  is  exchangeable  for 
U.  8.  six  per  cent,  bonds,  redeemable  at  the  pleasure  of  the  United  Mates  after 
five  years." 

The  right  to  exchange  these  notes  at  par  for  six  per  cent,  bonds 
was  distinctly  authorized  by  the  second  section  of  the  legal  ten 
der  act,  and  was  in  the  nature  of  a  contract  made  by  the  Govern 
ment  with  the  holders  of  the  notes.  It  was  inserted  as  a  just 
and  equitable  provision  for  the  benefit  of  those  persons  who 
should  be  compelled,  by  the  legal  tender  clause,  to  take  the  notes, 
by  giving  them,  at  any  time,  the  privilege  of  converting  them 
into  a  six  per  cent.  bond.  It  was,  in  effect,  a  forced  loan,  but 
the  right  of  immediately  returning  them  to  the  Government  for 
gold  bonds,  divested  the  forced  character  of  the  transaction  of 
any  material  hardship.  It  also  had  a  tendency  to  prevent  any 
great  inflation,  for  the  reason^  that  as  soon  as  this  currency  became 
redundant  in  the  hands  of  the  people,  and  not  bearing  interest, 
they  would  invest  it  in  the  six  per  cent,  bonds  to  prevent  any  loss 
of  interest. 

This  right  to  exchange  the  notes  for  bonds  was,  at  the  request 
of  Secretary  Chase,  taken  away  by  the  third  section  of  the  above 
act  after  July  1,  1863.  It  is  true  that  the  Secretary  had  still  the 
discretionary  power  to  receive  the  notes  at  par  for  bonds,  but  it 
never  seemed  to  be  quite  right  to  change  the  law  while  any  of 
the  legal  tender  notes  were  outstanding  with  the  above  endorse 
ment  upon  them. 

After  passing  the  $900,000,000  loan  act  and  the  national  cur 
rency  bank  bill,  authorizing  $300,000,000  of  national  currency, 


189 

Congress  adjourned  on  the  4th  of  March,  1863,  leaving  the  Secre 
tary  of  the  Treasury  clothed  with  most  extraordinary  discretion 
ary  power  to  carry  on  the  financial  affairs  of  the  Government, 

In  April  and  May  it  became  apparent  that  the  paper  currency 
was  sufficiently  expanded  to  enable  the  Secretary  to  float  the  5-20 
bonds  authorized,  to  the  amount  of  $500,000,000,  by  the  first 
legal  tender  act,  which,  up  to  that  time,  had  been  taken  only  to 
a  very  limited  amount. 

JAY  COOKE,  an  enterprising  banker  at  Philadelphia,  was  em 
ployed  as  General  Agent  by  Secretary  Chase  to  negotiate  these 
bonds.  He  advertised  very  extensively,  and  employed  sub- 
agents  in  all  the  principal  cities  and  towns  in  all  the  loyal  States. 
The  editors  of  newspapers  and  others  were  enlisted  to  bring  the 
advantages  and  importance  of  this  loan  before  the  people,  in  order 
to  make  it  a  great  popular  loan,  to  be  taken  by  them  in  large  and 
small  sums  in  all  the  loyal  States.  Mr.  Cooke  succeeded  admir 
ably  in  this  undertaking.  The  loan  became  very  popular,  and 
was  taken  extensively  by  farmers,  mechanics  and  laboring  people 
in  all  the  towns,  villages  and  cities  all  over  the  country.  By  the 
first  of  July,  1863,  the  amount  of  $168,880,250  of  these  bonds 
were  taken;  and  by  the  first  of  October!  following  $278,511,500 
had  been  taken  up;  and  by  the  21st  of  January  following  the 
whole  sum  of  $500,000,000  had  been  taken  at  par,  and  the  rush 
was  so  great  near  the  closing  out  of  the  loan,  that  nearly  $11,- 
000,000  extra  had  been  subscribed  and  paid  for  before  notice 
could  be  given  to  sub-agents  that  the  amount  authorized  by  that 
act  had  been  taken  up.  Congress,  however,  soon  after  authorized 
this  extra  sum  to  be  issued. 

This  successful  funding  of  5-20  six  per  cent,  bonds  showed 
conclusively  that  it  was  not  necessary  to  inflate  the  currency  an}r 
further  in  order  to  raise  the  means  to  successfully  prosecute  the 
war.  The  six  per  cent,  bonds  would  furnish  sufficient  inducement 
for  people  to  take  them  at  the  rate  of  from  $1,500,000  to  $2,000,- 
000  a  day,  which  was  about  the  amount  required  to  pay  the  daily 
expenses  of  the  Government.  It  looked  as  if  the  limit  of  paper 
money  expansion  had  been  reached;  that  the  greenback  currency 
would  not  further  depreciate  below  the  standard  of  gold:  and 
that  the  price  of  commodities  would  not  continue  to  advance. 

MISTAKE    OP    THE    TREASURY    DEPARTMENT. 

The  policy  of  funding  into  six  per  cent,  bonds,  which  had  been 
successful  during  the  last  eight  months,  was  changed  to  jice  per 


190 

cent.  10-40  bonds,  which  proved  unsuccessful,  and  funding  to  any 
considerable  extent  was  arrested  for  several  months.  The  people 
were  not  satisfied  with  this  change  made  by  the  Secretary  in  the 
rate  of  interest.  The  loan  became  unpopular,  and  only  $73,337,- 
750  was  taken  between  the  21st  of  January,  1864,  and  the  1st  of 
July  following,  more  than  five  months,  and  this  sum  was  taken 
mostly  by  bankers,  because  the  five  per  cent,  bonds  could  be  used 
in  the  organization  of  national  banks.  The  Secretary  had  the 
discretionary  power,  under  the  $900,000,000  loan  act,  to  continue 
the  funding  at  six  per  cent. ,  but  he  desired  to  lower  the  rate  of 
interest,  and  believed  that  he  could  successfully  negotiate  the  five 
per  cent,  bonds,  which  proved  to  be  a  mistake. 

Congress  passed  an  act  supplementary  to  the  $900,000,000  loan 
act,  giving  still  further  discretionary  powder  to  the  Secretary.  This 
act  was  approved  March  3,  1864,  and  is  the  law  under  which  the 
10-40  five  per  cent,  bonds  above  mentioned  were  issued.  It 
authorized  the  Secretary  to  issue  bonds  not  exceeding  $200.000,- 
000,  bearing  date  March  1,  1864,  or  any  subsequent  date,  redeem 
able  at  the  pleasure  of  the  Government  after  any  period  not  less 
than  five  years,  and  payable  at  any  period  not  more  than  forty 
years  from  date  in  coin,  bearing  interest  not  exceeding  six  per  cent. 
per  annum,  payable  on  bonds  not  over  $100,  annually,  and  on  all 
other  bonds  semi-annually,  in  coin. 

IMPOLICY    AT    THIS     TIME     OF     THE     10-40     BONDS TWO     LETTERS    BY 

E.     G.     SPAULDING    ON    THIS    SUBJECT. 

11  BUFFALO,  March  19,  1864. 

To  Morris  Ketchum,  Esq.,  Banker,  New  York: 

Dear  Sir — When  I  met  you  in  New  York  in  December  last,  you 
expressed  the  apprehension  that  the  rate  of  interest  on  government  securi 
ties  would  be  reduced  to  five  per  cent. ;  that  there  would  be  a  further 
inflation  of  the  currency ;  and ,  consequently,  that  gold  would  advance, 
and  the  price  of  labor  and  commodities  would  he  greatly  increased.  The 
apprehensions  which  you  then  expressed  are  now  being  realized,  and  the 
government  and  people  are  alike  feeling  its  evil  effects.  By  reducing  the 
rate  of  interest  from  six  to  five  per  cent,  on  bonds  and  notes  issued  to 
redeem  greenback  currency  printed  and  paid  out  by  the  government,  one 
per  cent,  interest  is  apparently  saved  to  the  government  on  its  notes  and 
bonds,  hut  all  the  flour,  Tbeef,  pork,  and  other  supplies  for  the  army  and 
navy  have  advanced  ten  to  fifteen  per  cent.,  thereby  making  it  necessary 
for  the  government  to  pay  ten  to  fifteen  per  cent,  more  for  all  supplies 
purchased,  while  it  saves  only  one  per  cent,  on  its  notes  and  bonds. 

Five  per  cent,  bonds,  running  from  five  to  twenty  years,  can,  no  doubt, 
be  floated  on  the  market  nominally  at  par,  if  the  currency  is  sufficiently 
diluted  and  the  volume  increased  large  enough  for  that  purpose ;  and  so 
may  four  per  cent,  bonds  be  carried  on  the  surface,  if  the  currency  is 


191 

printed  and  paid  out  in  such  a  large  volume  as  to  still  further  dilute  the 
government  paper  already  afloat.  But  if  this  should  be  successfully  car 
ried  out,  and  four  per  cent,  bonds  be  negotiated  at  par  in  consequence  of  a 
further  expansion  of  the  currency,  gold  would  advance  to  90  or  100  per 
cent.,  and  all  commodities  for  the  army  and  navy  would  advance  in  the 
same  proportion.  What  would  be  saved  in  the  rate  of  interest  would  be 
lost  fourfold  on  the  enhanced  price  of  all  supplies  purchased  to  carry 
on  the  war. 

Five  per  cent,  interest,  payable  in  currency,  which  has  been  the  rate 
since  the  twenty-first  of  January  last,  for  redeeming  legal  tender  notes,  is 
a  most  exhilarating  atmosphere  to  be  reveled  in  by  speculators  and  job- 
bers,  but  very  unsatisfactory  to  men  of  steady  purposes,  who  are  engaged 
in  manufactures,  commerce,  and  other  legitimate  pursuits.  With  such  a 
money  market,  all  articles  consumed  by  laborers  advance  in  price,  rents 
increase,  skilled  laborers  and  common  laborers  combine  and  strike  for 
higher  wages,  in  order  to  be  able  to  pay  for  the  enhanced  prices  of  living 
caused  by  the  excess  of  paper  issue. 

In  order  to  illustrate  what  I  desire  to  say  further  on  this  subject,  you 
will,  I  trust,  allow  me  to  make  a  brief  review  of  the  laws  of  Congress 
bearing  upon  the  increased  price  of  labor  and  commodities,  and  the 
advance  in  the  price  of  gold.  Gold  and  silver,  as  you  well  know,  are  the 
standard  of  value  in  conducting  the  commerce  of  all  the  civilized  nations 
of  the  world.  The  commerce  of  the  United  States  is  still  carried  on  with 
all  foreign  nations  with  gold  as  the  standard  or  measure  of  value. 

The  laws  of  Congress,  passed  in  1792,  fixed  the  gold  standard  in  the 
United  States,  for  the  ten  dollar  eagle,  at  two  hundred  and  forty-seven 
grains  and  four-eighths  of  a  grain  of  pure  gold,  or  two  hundred  and  sev 
enty-five  grains  of  standard  gold,  and  half  that  quantity  for  the  half  eagle. 
The  law  of  Congress,  passed  in  1837,  changed  the  gold  standard  established 
in  1792,  by  providing  that  the  standard  of  both  gold  and  silver  should  be 
such,  that  of  one  thousand  parts  by  weight,  nine  hundred  parts  should  be 
pure  metal  and  one  hundred  of  alloy ;  that  the  alloy  of  silver  coins  should 
be  of  copper,  and  the  alloy  of  gold  coins  should  be  of  copper  and  silver. 
That  the  weight  of  the  gold  eagle  should  be  two  hundred  and  fifty-eight 
grains,  that  of  the  half  eagle  one  hundred  and  twenty-nine  grains,  and 
that  the  eagle  should  be  a  legal  tender  for  ten  dollars,  and  the  half  eagle 
for  five  dollars.  This  was  the  standard  value  up  to  the  time  when  the  legal 
tender  note  bill  was  passed. 

The  last  loan  of  $50,000,000,  made  by  the  government  before  the  suspen 
sion  of  specie  payments,  was  on  the  issue  of  six  per  cent,  twenty  year 
bonds  at  89^,  being  a  discount  of  10%  per  cent.,  and  a  loss  to  the  Treasury 
of  about  $5,338, 7G9.  The  agreement  for  this  loan  was  made  with  the  asso 
ciated  banks  of  Xew  York,  Boston  and  Philadelphia,  in  the  fall  of  1861. 
It  was  made  on  a  specie  basis,  and  in  the  efforts  made  by  the  banks  to  pay 
the  gold  on  this  loan  into  the  Sub-Treasury,  it  brought  on  such  a  strin 
gency  in  the  money  market  as  to  cause  a  general  suspension  of  specie 
payments  on  the  31st  of  December,  1SG1,  which  made  it  exceedingly  diffi 
cult  for  the  banks  to  pay  the  last  instalments  to  complete  the  loan.  Xo 
further  loans  could  be  negotiated  except  at  a  still  greater  discount ;  indeed, 
it  was  deemed  nearly  or  quite  impossible  to  make  any  further  loans  on  a 
specie  basis,  unless  at  the  most  ruinous  rates  of  discount.  There  was  then 
due  to  the  army  and  navy,  and  for  supplies,  not  less  than  $100,000,000,  and 
aj  least  $200,000,000  more  would  be  required  within  six  months.  The 


192 

necessity  for  immediate  action  was  most  pressing  and  urgent.  We  were 
grappling  with  a  most  gigantic  rebellion.  We  were  in  a  most  extraordi 
nary  crisis,  and  extraordinary  measures  had  to  be  resorted  to,  in  order  to 
save  the  government  and  preserve  our  nationality.  In  this  great  emer 
gency  the  original  legal  tender  note  bill,  introduced  by  me  as  a  necessary 
war  measure,  and  which,  after  being  amended  and  passed,  was  approved 
by  the  President  February  25th,  1862,  changed  the  standard  of  value,  not 
with  the  world  at  large,  but  within  the  United  States,  by  authorizing  the 
Secretary  of  the  Treasury  to  issue  $150,000,000  of  United  States  notes  to 
circulate  as  currency,  making  them  lawful  money  and  a  legal  tender  for 
all  debts,  public  and  private,  and  providing  for  their  redemption  at  all 
times  at  the  Treasury  Department  in  five-twenty  six  per  cent,  bonds, 
interest  payable  semi-annually  in  coin ;  and  further  authorizing  the  issue 
of  $500,000,000  of  these  bonds  for  that  purpose.  This  was  not  the  issue  of 
an  irredeemable  paper  currency.  There  was  a  fixed  standard  and  measure 
of  value  for  the  redemption  of  all  these  legal  tender  notes  as  they  should 
be  issued  and  re-issued  from  time  to  time.  That  standard  was  five-twenty 
six  per  cent,  bonds,  principal  and  interest  payable  in  gold,  whatever  might 
be  their  value.  Every  person  who  should  receive  these  notes  voluntarily, 
or  by  compulsion,  knew  exactly  what  he  could  do  with  them.  He  knew 
that  the  laws  of  Congress  provided  that  he  should  have  gold  bearing  bonds 
for  all  the  notes  taken  by  him.  The  redemption  in  this  case  was  not  gold 
on  demand  as  formerly,  but  six  per  cent,  interest  in  gold  every  six  months, 
and  the  principal  payable  in  gold  within  twenty  years.  This  was  the 
standard  of  value  fixed  by  the  legal  tender  note  bill.  It  was  in  effect  a 
forced  loan  from  the  people  to  the  government,  but  at  a  fair  rate  of  interest 
for  both  the  lender  and  the  borrower. 

This  was  a  radical  change  in  the  standard  or  measure  of  value  within 
the  United  States,  but  it  was  a  fixed  standard  established  by  law,  and  every 
business  man  could  act  upon  it,  and  shape  all  his  contracts  and  business 
transactions  accordingly. 

The  act  of  July  llth,  18G2,  authorized  a  further  issue  of  $150,000,000  of 
legal  tender  notes,  and  requiring  their  redemption  by  the  government  at 
all  times,  on  demand,  in  the  5.20  six  per  cent,  bonds;  still  leaving  the 
standard  of  value  of  legal  tender  notes  by  providing  for  their  conversion 
at  any  time  into  six  per  cent.  United  States  bonds,  principal  and  interest 
payable  in  gold.  Although  this  was  in  effect  a  forced  loan  from  the 
people,  it  was  so  fair  and  equitable  in  its  terms,  the  peril  of  the  country  so 
great,  and  the  object  to  be  attained  in  crushing  the  rebellion  so  important, 
that  no  loyal  citizen  could  object  to  it.  There  was  no  very  great  danger 
that  the  currency  would  become  excessively  inflated  so  long  as  every 
person  holding  greenbacks,  not  bearing  interest,  could  exchange  them 
at  his  own  will  into  gold-bearing  bonds  at  six  per  cent,  interest  per 
annum. 

In  the  remarks  which  I  made  in  the  House  on  the  17th  of  June,  1862,  in 
favor  of  this  additional  issue  of  legal  tender  notes,  I  said  that  '  I  never 
have  been,  and  I  trust  I  never  shall  be,  unnecessarily  an  advocate  for  the 
creation  of  an  unsound  or  an  inflated  currency ;  but,  sir,  I  have  long  ago 
resolved,  since  this  savage  Avar  has  been  forced  upon  us,  to  do  whatever 
was  necessary,  and  which  I  might  lawfully  do,  to  crush  out  the  traitors 
and  annihilate  their  armies.  This  cannot  be  done  without  the  '  sinews  of 
war.'  Your  army  and  navy  must  be  supplied  with  all  the  terrible  arma 
ment  necessary  to  crush  the  enemy.  Your  sick,  wounded  and  famishing 
soldiers  must  all  be  supplied  with  hospitals,  medical  attendance,  and  all 


193 

necessaries  and  conveniences  to  make 'them  comfortable.  This  is  a  plain 
duty  which  we  cannot  any  of  us  fail  to  perform.  If,  in  the  performance  of 
this  duty,  it  becomes  necessary  to  authorize  a  further  issue  of  United 
States  notes,  I  shall  not  hesitate  to  give  my  vote  for  it.  I  am  not  in  favor 
of  increasing  the  issue  of  them  beyond  the  imperative  necessities  of  the 
government  to  sustain  the  army  and  navy.  I  much  prefer  to  have  our  six 
per  cent,  bonds  issued  on  permanent  loans.  I  would  like  to  see  the  Secre 
tary  of  the  Treasury  borrow  at  par  all  the  money  he  can  on  the  six  per 
cent,  bonds  heretofore  authorized  to  be  issued. 

When  money  can  be  obtained  at  par  on  six  per  cent,  bonds,  I  would 
prefer  to  have  that  done  to  the  issuing  a  very  large  amount  of  legal  tender 
notes.  Too  large  an  issue  of  demand  notes,  to  circulate  as  money,  will  no 
doubt  lead  to  an  expansion  which  will  inflate  prices,  stimulate  undue 
speculations,  and  ultimately  produce  a  reaction  that  will  derange  the 
whole  business  of  the  country.  This  is  to  be  avoided  if  possible.  I  cannot 
therefore,  advocate  any  greater  issue  of  demand  notes  than  the  absolute 
necessities  of  the  government  requires  to  carry  on  the  war  with  vigor.  I 
am  disposed  to  give  the  Secretary  power  to  issue  the  additional  $150,000,- 
000  United  States  notes  asked  for  by  him;  but,  at  the  same  time,  I  feel  the 
importance  of  having  this  power  exercised  discreetly,  and  I  trust  that  he 
will  not  issue,  or  pay  them  out  at  all,  when  money  can  be  obtained  at  par 
on  our  six  per  cent,  bonds.  I  do  not  understand  that  the  Secretary  intends 
to  have  them  all  issued  and  put  into  circulation  at  any  one  time ;  on  the 
contrary,  I  believe  he  has  no  such  intention.  He  wants  the  power  to  issue 
and  use  them  if  necessary,  but  not  otherwise.  When  he  can  obtain  a  suffi 
cient  amount  of  money  at  par,  on  six  per  cent,  bonds,  or  by  temporary 
deposits  in  the  Treasury,  there  will  be  no  necessity  for  their  issue,  and  the 
Secretary  assures  us  in  his  letter  that  no  further  issues  of  notes  will  be 
made  when  that  can  be  done ;  and,  besides,  the  bill  provides  for  this  retain 
ing  in  his  own  hands  legal  tender  notes  equal  to  one-third  of  the  tempo 
rary  deposits  that  may  be  in  the  Treasury.' 

The  government  was  carried  on  smoothly  and  the  war  prosecuted 
vigorously  under  this  system  up  to  January  21,  1864,  when  the  5-20  six 
per  cent,  bonds  authorized  by  the  act  of  25th  of  February,  1862.  were 
exhausted.  In  the  mean  time,  the  standard  of  value  for  the  redemption 
of  greenbacks  had  been  changed,  which  is  the  principal  cause  of  the  present, 
advance  in  the  price  of  gold  and  other  commodities  and  services,  as  I  will  now 
proceed  to  show. 

The  act  of  the  3d  of  March,  1863,  to  provide  ways  and  means  for  the 
support  of  the  government,  commonly  called  the  $900,000,000  loan  bill,  so 
modified  the  legal  tender  note  bill  as  to  leave  it  in  the  discretion  of  the 
Secretary  of  the  Treasury  to  fix  the  time  and  manner  of  issuing  the  bonds 
or  notes,  and  the  rate  of  interest  they  should  bear  under  the  act.  It  gives 
him  the  power  to  issue  them  at  six  per  cent.,  five  per  cent.,  or  even  at  a 
lower  rate  of  interest  if  he  deems  advisable;  but  under  the  modification  of 
the  act,  there  is  no  longer  any  standard  of  value  fixed  by  law.  It  rests  with 
the  Secretary  to  say,  from  time  to  time,  what  the  rate  of  interest  shall  be. 
He  also  has  the  power  to  issue  and  re-issue  legal  tender  notes  on  demand 
and  on  time  in  sufficient  volume  to  float  five  per  cent.,  and  even  four  per 
cent,  bonds  and  notes,  if  he  shall  deem  it  advisable  to  do  so.  No  man  can 
regulate  his  contracts  or  business  affairs  with  any  certainty.  No  person, 
when  he  takes  legal  tender  greenback  currency,  can  fix  in  his  own  mind 
what  is  its  real  value.  It  is  no  longer  convertible  at  the  will  of  the  holder 


194 

into  United  States  six  per  cent,  bonds,  nor  is  there  any  provision  in.  the 
law  which  compels  the  government  to  redeem  them  in  any  kind  of  bonds, 
or  in  any  other  way — except  for  dues  to  the  government.  It  has,  how 
ever,  been  the  practice  of  the  Treasury  Department  during  the  past  two 
months  to  redeem  legal  tender  greenbacks,  not  bearing  interest,  by 
exchanging  for  them  one  and  two  years  Treasury  notes  bearing  five  per 
cent,  interest,  both  principal  and  interest  payable  in  currency. 

I  did  not,  at  the  last  session  of  Congress,  think  it  wise  to  change  the 
standard  of  value  fixed  in  the  legal  tender  note  bill.  1  thought  it  better 
to  issue  and  pay  out  to  the  army  and  navy,  and  other  creditors  of  the 
Government,  an  amount  of  greenbacks  sufficient  to  float,  easily,  the  five- 
twenty  six  per  cent,  bonds,  but  no  more.  I  believed  seven  and  3-10  per 
cent,  interest  too  high  a  rate;  but  I  deemed  it  fair  and  just  that  on  lorced 
loans  of  this  kind  that  the  Government  should  pay  six  per  cent.,  and  that 
the  war  should  be  prosecuted  until  the  rebellion  should  be  crushed,  on 
the  basis  of  six  per  cent,  interest  on  all  the  funded  debt  to  accomplish 
that  result.  I  thought  it  better  for  the  Government  and  the  people  that 
there  should  be  that  stability  attached  to  business  transactions  which  can 
only  be  fully  realized  by  a  public  law  establishing  the  measure  of  value. 
In  the  remarks  which  I  made  in  the  House  on  the  12th  of  January,  1863, 
I  said,  '  that  Congress,  by  its  legislation  at  the  last  session,  has,  to  a  con 
siderable  extent,  changed  the  standard  of  value  for  all  business  operations 
with  the  United  States.  The  standard  of  value  fixed  by  Congress  is  legal 
tender  Treasury  notes,  convertible  at  any  time  into  United  States  specie- 
paying  bonds,  bearing  interest  at  the  rate  of  six  per-  centum  per  annum, 
payable  half-yearly  in  coin,  based  upon  adequate  taxation  upon  the  entire 
property  of  the  country.  Legal  tender  notes  constitute  the  national  cur 
rency  now  established  by  law.  All  exchanges  of  property,  all  contracts,  and 
all  loans,  are  based  upon  the  value  of  legal  tender  notes  and  United  States  six 
per  cent,  bonds."1 

At  a  later  period  in  the  session  the  $900,000,000  act  was  passed.  I  was 
not  in  favor  of  the  change  made  by  that  act  in  the  standard  of  value,  or 
rather  I  was  not  in  favor  of  the  discretionary  power  given  to  the  Secretary 
of  the  Treasury  to  change  it,  as  provided  in  the  act ;  not  because  I  had 
not  full  confidence  in  the  Secretary,  but  because  I  thought  it  better  that 
so  important  a  matter,  relating  as  it  does  to  the  stability  of  the  whole 
business  operations  of  the  country,  should  be  fixed  in  the  law  itself,  so 
that  all  men  could  shape  their  business  accordingly.  This  would  have 
relieved  the  Secretary  from  a  vast  responsibility,  and  the  inflations,  fluc 
tuations  and  changes  now  so  apparent  would  have  been  less  likely  to  have 
happened.  I  reluctantly  assented  to  the  change.  It  was  against  my 
better  judgment,  and  I  am  now  satisfied  that  it  was  a  mistake. 

The  daily  conversions,  during  the  past  year,  of  legal  tender  notes  into 
the  5-20  six  per  cent,  bonds,  at  the  rate  of  from  one  to  two  millions  a  day, 
furnished  the  means  for  paying  the  daily  expenditures  of  the  Govern 
ment;  the  conversions  went  on  so  smoothly,  so  steadily  and  so  satisfac 
torily  to  all  parties,  without  causing  any  great  inflation  of  the  currency, 
or  increase  in  the  price  of  labor  or  commodities,  that  I  was  in  hopes  it 
would  be  continued  by  the  Secretary,  under  the  discretionary  power  given 
him  to  continue  it,  under  the  $900,000,000  loan  bill.  This  would  have 
kept  things  steady,  kept  down  the  price  of  gold,  and  would  probably  have 
prevented  any  necessity  for  paying  out  the  reserve  $50,000,0000  of  green 
backs  Avhich  have  been  issued  since  the  meeting  of  Congress,  and  over 


195 

$150,000,000  five  per  cent,  one  and  two  years  legal  tender  notes,  also  issued 
and  circulated  to  a  considerable  extent  as  currency,  making  about  $200,- 
000,000  that  have  been  printed  and  paid  out  since  the  meeting  of  Congress 
in  December  last,  which,  added  to  the  $400,000,000  of  greenbacks  pre 
viously  issued,  amounts  altogether  to  $600,000,000  of  greenbacks  and 
legal  tender  Treasury  notes,  and  which  is  probably  a  volume  of  currency 
large  enough  to  fioat  the  proposed  new  issue  of  five  per  cent,  ten-forty 
bonds ;  but  it  is  not  my  wish  or  desire  to  say  a  word  that  will  in  any  way 
retard  or  embarrass  the  operations  of  the  government  in  a  vigorous  prose 
cution  of  the  war  to  put  down  this  gigantic  and  wicked  rebellion,  and 
effectually  remove  the  cause  that  brought  on  such  a  bloody  war.  The  last 
man  and  the  last  dollar  are  pledged  for  this  purpose,  and,  if  necessary,  to 
inflate  the  currency  to  such  an  extent  that  10-40  five  per  cent,  bonds  may 
be  tloated  at  par,  I  am  ready  to  yield  my  assent  to  such  a  measure,  and 
will  lend  my  feeble  efforts  to  sustain  the  administration  in  carrying  it  out. 
The  rebellion  must  be  crushed  at  all  hazards,  and  at  every  sacrifice. 

The  principal  object  I  have  in  writing  to  you  at  this  time,  is  to  solicit 
the  co-operation  of  our  friends  in  New  York  in  submitting  to  Congress 
the  propriety  of  establishing,  by  law,  the  standard  value  of  legal  tender  notes, 
by  fixing  the  rate  of  interest  at  which  they  may  at  any  time  be  converted 
into  the  funded  debt  of  the  United  States,  principal  and  interest  payable 
in  gold.  If  it  is  to  be  five  per  cent,  bonds,  gold  and  prices  will  be  consid 
erably  higher  than  they  will  be  if  such  notes  are  convertible  into  six  per 
cent,  bonds.  I  think  it  will  be  cheaper  in  the  end,  and  specie  payments 
can  be  resumed  at  an  earlier  day,  for  the  Government  to  continue  the  con 
version  of  legal  tender  notes  into  six  per  cent,  bonds,  because  gold  will 
be  lower  and  prices  less ;  but  whatever  the  rate  of  interest  is  to  be,  I  trust 
it  will  be  fixed  in  the  law  itself,  so  that  all  business  men  may  be  able  to 
shape  their  contracts  and  business  in  accordance  with  the  public  law 
establishing  such  standard  of  value. 

I  intended  to  say  a  few  words  on  one  or  two  other  points,  but  this  letter 
is  already  longer  than  I  intended,  and  I  must  defer  to  some  other  more 
convenient  time  what  more  I  may  desire  to  say  on  the  national  finances. 
I  remain  yours,  very  truly, 

E.  G.  SPAULDING. 


NEW  YORK,  March  21. 

My  Dear  Sir— I  am  in  receipt  of  your  favor  of  the  19th  inst.,  upon  the 
subject  of  national  finances. 

It  expresses  fully  and  clearly  my  own  views— so  admirably,  in  fact, 
that  I  beg  your  permission  to  publish  it,  as  I  think  it  of  great  importance 
that  the  attention  of  business  men  should  be  drawn  to  the  subject— than 
which  nothing  is  of  greater  or  more  immediate  consequence  to  their  inter 
ests.  Truly  yours, 

MORRIS  KETCHUM. 

Hon.  E.  G.  SPAULDING. 


BUFFALO,  April  11,  1864. 

Morris  Ketchum,  Esq.,  Banker,  N.  Y.  : 

Dear  Sir— Referring  to  my  letter  to  you  of  the  19th  of  March  last,  1 
desire  to  make  some  additional  remarks  on  the  National  Finances.  It  is  a 
subject  upon  which  I  feel  a  deep  interest,  for  you  well  know  that  if  we  fail 


196 

here  there  is  danger  that  we  may  not  succeed  in  accomplishing  what  is 
the  most  ardent  wish  of  all  patriotic  citizens— that  of  crushing  the  rebel- 
lion,  and  a  restoration  of  the  national  unity.  The  national  debt  will 
increase  at  a  fearful  rate,  under  any  policy  that  can  be  devised,  and  pru 
dent,  patriotic  citizens  are  looking  anxiously  at  the  result  of  measures 
that  are  adopted.  Desiring,  as  I  do,  the  crushing  of  the  rebellion  in  the 
shortest  time,  and  with  the  least  possible  expenditure  of  blood  and  treas 
ure,  I  venture  to  make  a  few  suggestions  further  on  the  future  policy  of 
executing  the  $900,000,000  loan  act. 

It  seems  to  me  that  the  policy  of  the  Treasury  Department  for  the  last 
three  months  has  been  that  of  inflation,  and  over-issues  of  a  paper  circulating 
medium.  It  has,  by  such  a  policy,  unintentionally  stimulated  and  encour 
aged  speculations  in  gold,  stocks  and  other  things,  rather  than  to  encourage 
industry,  the  production  of  commodities,  and  other  legitimate  business. 
Under  this  policy,  gold  has  advanced  20  per  cent.,  and  the  price  of  labor 
and  commodities  continues  to  increase  to  such  an  extent  as  to  render  it 
very  embarrassing  for  business  men  to  carry  on  their  ordinary  pursuits. 
I  know  very  well  that  these  evils  cannot  be  fully  guarded  against  during 
the  prosecution  of  such  a  gigantic  war,  and  the  large  amount  of  paper 
necessarily  issued  by  the  Government ;  but  it  is  the  duty  of  the  Govern 
ment  that  these  evils  should  be  mitigated  and  rendered  as  light  as 
possible. 

The  Department  has  partially  executed  the  $900,000,000  loan  act;  the 
first  section  of  which  authorized  the  Secretary  to  borrow  the  whole  amount 
of  nine  hundred  millions  of  dollars  on  the  ten-forty  bonds,  bearing  six  per 
cent,  (or,  in  his  discretion,  five  or  four  per  cent.)  interest  payable  semi- 
annually  in  coin ;  or,  by  other  sections  of  the  bill,  he  had  the  discretionary 
power  to  print  and  pay  out  to  creditors  of  the  Government  an  additional 
amount  of  $150,000,000  of  greenbacks,  and  $400,000,000  legal  tender  Treas 
ury  notes,  which,  in  the  form  issued  by  him,  circulate  to  a  considerable 
extent  as  currency ;  and  a  further  contingent  authority  to  issue  a  still  fur 
ther  sum  of  $150,000,000  of  greenbacks;  but  the  whole  aggregate  of  all 
kinds  of  bonds  and  notes  to  be  issued  under  the  bill  was  not  to  exceed 
$900,000,000. 

In  administering  and  carrying  into  effect  the  provisions  of  this  act,  it  is 
plain  that,  by  borrowing  on  the  issue  of  ten-forty  six  per  cent,  bonds 
under  the  first  section  of  the  act,  the  tendency  would  be  to  repress  and 
keep  down  inflation,  prevent  speculation  in  stocks,  gold  and  other  com 
modities,  and,  at  the  same  time,  by  holding  a  steady  money  market, 
encourage  all  kinds  of  productive  industry  and  other  legitimate  pursuits. 

On  the  other  hand,  by  resorting  to  the  other  sections  of  the  bill  and 
issuing  greenbacks  anc\  legal  tender  treasury  notes  in  large  volume,  the 
currency  is  still  further  expanded  and  cheapened  to  such  an  extent  that 
all  legitimate  business  is  greatly  embarrassed  by  the  increase  in  the  price 
of  labor,  the  cost  of  living,  transportation,  and  the  cost  of  the  raw  mate 
rials  used  in  building,  manufacturing,  and  other  industrial  operations. 

In  the  partial  execution  of  this  law,  the  Treasury  Department  has 
printed  and  paid  out  $150,000,000  greenbacks  as  currency,  and  over  $175,- 
000,000  of  one  and  two  years  legal  tender  Treasury  notes,  which  also 
circulate  to  a  considerable  extent  as  currency,  making  $325.000,000  of 
inflating  paper  issued  under  this  act,  thus  far ;  while  the  department  has 
only  borrowed  on  a  permanent  ban,  under  the  first  section  of  the  bill  and 
the  supplementary  act,  less  than  $15,000,000  on  Jive  instead  of  six  per  cent, 
ten-forty  bonds.  The  whole  policy  thus  far  under  this  law  has  been  one 


197 

of  inflation  on  temporary  loans,  rather  than  funding  on  long  government 
bonds  at  a  fair  rate  of  interest. 

It  has  been  supposed  that  by  this  policy  of  inflation  a  five  per  cent,  ten- 
forty  bond  might  be  floated  nominally  at  par.  Funding  the  present 
excessive  floating  debt  at  five  per  cent,  interest  is  better  than  not  to  be 
funded  at  all,  and  I  hope  that  the  bonds  now  offered  at  five  per  cent,  may 
be  taken  up  rapidly,  and  that  the  evils  of  the  present  inflation  may  be 
removed ;  but  I  fear  the  conversions  will  not  be  rapid  enough  at  this  rate 
of  interest.  The  bonds  do  not  seem  to  be  readily  taken,  as  yet,  by  the 
people.  It  required  the  printing  and  paying  out  of  $400,000,000  of  green 
backs  before  the  five-twenty  six  per  cent,  bonds  could  be  floated  easily  at 
par,  and  it  will  probably  require  the  circulating  paper  issues  of  the  Gov 
ernment,  now  amounting  to  about  $625,000,000,  to  be  increased  to  $650,- 
000,000  or  $700,000,000,  before  the  people  will  be  induced  to  take  five  per 
cent,  bonds  in  order  to  get  rid  of  the  surplus  circulation  that  may 
accumulate  in  their  hands,  that  cannot  be  more  profitably  invested  in 
other  modes. 

I  agree  with  all  that  has  been  said  by  the  Press  and  in  Congress  in  favor 
of  annual  taxation  to  the  amount  of  $300,000,000.  At  the  extra  session  of 
Congress  in  July,  1861,  I  advocated  immediate  taxation  to  the  extent  of 
paying  the  annual  expenses  of  the  government  on  a  peace  footing,  and  the 
interest  on  all  the  war  debt,  and  I  have  advocated  that  policy  ever  since. 
I  hope  Congress  will  not  adjourn  without  providing  for  raising  at  least  the 
sum  of  $300,000,000  each  year  by  taxation.  Assuming  that  Congress  will 
provide  for  raising  that  sum  by  taxation  for^he  next  fiscal  year,  still  the 
whole  expenses  of  the  year  will  not  be  less  than  $1,000,000,000,  which  will 
leave  the  additional  sum  of  $700,000,000  to  be  borrowed  in  some  form  to 
pay  the  expenses  of  the  army  and  navy.  This  brings  us  to  the  practical 
question:  How  is  this  large  sum  to  be  obtained?  Shall  it  be  on  tempo 
rary  issues  of  paper  calculated  to  still  further  inflate  the  currency  already 
afloat,  thereby  adding  to  the  embarrassments  already  bad  enough;  or 
shall  it  be  on  a  permanent  loan,  based  on  the  issue  of  long  bonds,  principal 
and  interest  payable  in  gold,  and  at  such  a  fair  rate  of  interest  that  the 
bonds  will  be  readily  taken,  in  such  large  amounts  as  not  only  to  make 
any  further  temporary  issues  under  the  $900,000,000  act  unnecessary,  but 
also  materially  diminish  the  present  excess  of  paper  currency  ?  This 
wrould  check  speculation,  and  bring  down  the  price  of  gold  and  all  other 
commodities  to  a  more  safe  and  stable  standard. 

It  is  of  great  consequence  for  all  business  men  to  know  what  is  to  be  the 
future  policy  of  the  Treasury  Department.  Whether  it  will  still  further 
inflate  the  currency  by  temporary  expedients,  or  wrhether  it  will  contract 
the  floating  debt  by  funding  in  long  bonds.  Shall  it  be  inflation  and  high 
prices,  or  contraction  and  lower  prices  ?  This  question  is  of  vital  interest, 
affecting  the  large  purchases  of  the  Government  in  the  prosecution  of  the 
war,  as  well  as  the  legitimate  business  of  the  people. 

If  the  Treasury  Department  will  print  and  put  at  the  disposal  of  the 
people  ten-forty  bonds,  paying  six  per  cent,  interest  semi-annually  in 
coin,  for  the  balance  of  the  $900,000,000  loan,  it  will  be  so  rapidly  taken, 
judging  from  the  manner  in  which  conversions  were  made  into  the  5-20 
bonds,  that  all  its  other  printing  presses  employed  in  printing  temporary 
circulating  paper  may  be  safely  stopped  until  this  loan  is  exhausted,  and 
with  the  most  beneficial  results  tcrthe  Government  and  the  people.  • 
I  remain,  yours,  truly, 

E.  G.  SPAULDIXG, 


198 

SECRETARY     CHASE     RESIGNS,     AND     WM.     P.     FESSENDEN     APPOINTED 
SECRETARY    OF    THE    TREASURY. 

The  attempt  of  the  Secretary  of  the  Treasury  to  float  five  per 
cent.  10-40  bonds  made  it  necessarjr,  in  order  to  pay  the  current 
expenses  of  the  Government,  to  issue  and  keep  out  large  amounts 
of  currency  in  the  form  of  greenbacks,  legal  tender  notes,  inter 
est-bearing  Treasury  notes,  certificates  of  indebtedness,  postal 
and  fractional  currency,  and  national  bank  notes,  besides  the  cur 
rency  issued  by  State  banks.  Gold  and  commodities  continued 
to  advance  in  price.  On  the  15th  of  January,  '64,  gold  was  1. 55,  on 
the  15th  of  April  1.78,  on  the  15th  of  June  1.97,  and  on  the  29th 
of  June  2.35  to  2.50,  which  showed  that  the  legal  tender  notes 
were  worth  only  forty  cents  on  a  dollar  in  gold. 

On  the  30th  of  June,  1864,  Secretary  Chase  resigned  the  office 
of  Secretary  of  the  Treasury.  President  Lincoln  announced  the 
fact  to  the  Senate  by  nominating  David  Todd,  of  Ohio,  to  fill  the 
vacancy,  which  was  the  first  announcement  of  the  resignation  of 
Gov.  Chase.  Gov.  Todd  declined  the  appointment.  Mr.  George 
Harrington,  Assistant  Secretary,  was  appointed  Secretary  of  the 
Treasury  ad  interim.  William  P.  Fessenden,  U.  S.  Senator  from 
Maine,  with  some  reluctance,  finally  consented  to  take  the  place. 

He  was  nominated  and  confirmed,  and  entered  upon  the  duties 
of  the  office  on  the  5th  of  July. 

He  subsequently  published  a  statement  of  the  audited  public 
debt  as  it  existed  on  the  books  of  the  Treasury  Department  on 
the  30th  day  of  June,  which  was  the  close  of  the  fiscal  year,  and 
the  day  that  Seeretaiy  Chase  resigned,  showing  the  total  amount 
of  debt  to  be  $1,740,690,489.49.  The  10-40  five  per  cent,  bonds 
amounted  only  to  $73,337,750. 

This  statement  showed  that  the  currency  items  and  others 
operating  to  inflate  prices  were  as  follows : 

TJ.  S.  notes,  greenbacks - $431,178,670  84 

Postal,  fractional  currency 22,894,877  25 

Interest-bearing  legal  tender  Treasury  notes 168,571,450  00 

Certificates  of  indebtedness 160,720,000  00 

National  bank  notes 25,825,695  00 

Aclcl  State  bank  circulation,  not  less  than  -  -  - 135,000,000  00 

$944,190,693  09 

Seven-thirty  Treasury  notes..  ..$109,356,150  00 

Temporary  deposits  for  which  certificates 

were  issued.-  $  72,330.191  44— $181,686,341  44 

June  30,  1864.  total  inflating  paper  issued $1,125,877,034  53 


199  HEl  o  «* 

This  great  inflation,  with  the  military  situation  doubtful 
unsatisfactory,  caused  gold  to  advance  until  July  11,  1864, 
it  reached  its  highest  quotation,  2.85^-,  or,  more  accurately 
ing,  the  United  States  notes  continued  to  decline  until  they  were 
only  worth  in  gold  35  cents  on  the  dollar  at  the  Board  of  Brokers 
in  the  city  of  New  York. 

It  w^as  thought  at  the  time  that  the  gold  bill  passed  by  Congress, 
and  approved  June  17,  1864,  prohibiting  time  contracts  for  the 
sale  of  gold  and  foreign  exchange,  operated  to  advance  the  price 
of  gold,  instead  of  depressing  it.  It  was  intended  by  Congress, 
in  passing  the  act,  to  prevent  the  gold  speculators  from  operating 
for  an  advance,  but  it  had  the  contrary  effect,  and  only  aggravated 
the  difficult}^.  The  price  of  gold  would  advance  in  spite  of  the 
legal  enactments,  and  the  act  only  continued  in  force  fifteen  days, 
(the  2d  of  July)  when  it  was  repealed. 

Secretary  Fessenden  says  "that  on  assuming  the  office  on  the 
5th  of  July  he  found  his  condition  peculiarly  embarrassing.  The 
cash  balance  in  the  Treasury  was,  on  the  first  of  July,  $18,842,. 
558.71,  and  the  unpaid  requisitions,  chiefly  for  the  army,  were 
$71,814,000,  and  the  daity  expenditures  $2,250,000."  The  loan 
of  $33,000,000,  advertised  by  Secretary  Chase  on  the  25th  of 
June,  was  withdrawn  on  the  2d  of  July.  Secretary  Fessenden 
raised  the  means  to  carry  on  the  Government  to  March  4,  1865, 
by  the  issue  of  greenbacks,  7-30  Treasury  notes,  interest-bearing 
Treasury  notes,  certificates  of  indebtedness,  loans  of  money 
obtained  on  six  per  cent.  5-20  bonds,  and  the  receipts  from  taxes. 
In  his  Annual  Report  he  says : 

"The  experience  of  the  past  few  months  cannot  have  failed  to  convince 
the  most  careless  observer  that,  whatever  may  be  the  effect  of  a  redun 
dant  circulation  upon  the  price  of  coin,  other  causes  have  exercised  a 
greater  and  more  deleterious  influence.  In  the  course  of  a  few  days  the 
price  of  this  article  rose  from  $1.50  to  $2.85  in  paper  for  $1.00  in  specie, 
and  subsequently  fell,  in  as  short  a  period,  to  $1.87,  and  then  again  rose, 
as  rapidly,  to  $2.50;  and  all  without  any  assignable  cause,  traceable  to  an 
increase  or  decrease  in  the  circulation  of  paper  money,  or  an  expansion 
or  contraction  of  credit,  or  other  similar  influence  on  the  market,  tending 
to  occasion  a  fluctuation  so  violent.  It  is  quite  apparent  that  the  solution 
of  the  problem  may  he  found  in  the  unpatriotic  and  criminal  efforts  of 
speculators,  and  probably  of  secret  enemies,  to  raise  the  price  of  coin, 
regardless  of  the  injury  inflicted  upon  the  countrj-— or,  desiring  to 
inflict  it." 

IX1TED    STATES    NOTES    LIMITED    TO    $400,000,000. 

By  the  second  section  of  the  act  of  June  30,  1864,  it  was  pro 
vided  that  * '  the  total  amount  of  United  States  notes  issued,  or  to 


200 

be  issued,  shall  not  exceed  $400,000,000,  and  such  additional  sum 
not  exceeding  $50,000,000,  as  may  be  temporarily  required  for 
the  redemption  of  temporary  loans." 

This  act  contained  a  further  provision  that  '  *  all  bonds,  Treas 
ury  notes,  and  other  obligations  of  the  United  States,  shall  be 
exempt  from  taxation,  by  or  under  State  or  municipal  authority ;" 
and  the  last  section  of  this  act  declares  that  "the  words  'obligation 
or  other  security  of  the  United  States,'  used  in  this  act,  shall  be 
held  to  include  and  mean  all  bonds,  coupons,  national  currency, 
United  States  notes,  Treasury  notes,  fractional  notes,  checks  for 
money  of  authenticated  officers  of  the  United  States,  certificates 
of  indebtedness,  certificates  of  deposits,  stamps,  and  other  rep 
resentatives  of  value  of  whatever  denomination,  which  have  been 
or  may  be  issued  under  any  act  of  Congress." 

This  act  also  authorized  the  issue  of  $200,000,000  of  interest- 
bearing  Treasury  notes,  payable  at  any  time  not  exceeding  three 
3rears  from  date,  and  made  a  legal  tender  at  their  face  value  to 
the  same  extent  as  United  States  notes,  except  in  redemption 
of  notes  issued  by  banks.  And  the  power  to  issue  interest-bear 
ing  Treasury  notes,  of  this  character,  was  still  further  enlarged  by 
the  act  of  January  28,  1865.  This  ^vas  the  last  act  of  Congress 
giving  power  to  the  Secretary  of  the  Treasury  to  issue  any  kind  of  legal 
tender  notes. 

HOW     SECRETARY     McCULLOCH     PAID     THE     ARMY     AT    THE     CLOSE 
OF     THE     WAR. 

Upon  the  inauguration  of  President  Lincoln  for  a  second  term, 
Hugh  McCulloch  was  appointed  Secretary  of  the  Treasury  in 
place  of  Mr.  Fessenden,  who  wished  to  be  relieved  from  the  duties 
of  the  office,  and  who  returned  again  to  the  Senate.  Secretary 
McCulloch  did  not  increase  the  issue  of  United  States  notes,  but 
continued  the  issue  of  bonds,  7-30  Treasury  notes,  and  compound 
interest-bearing  Treasury  notes  made  a  legal  tender  at  their  face 
value.  After  the  surrender  of  the  rebel  armies  to  General  Grant 
and  General  Sherman,  the  volunteer  army  was  mustered  out  of 
the  service,  and  had  to  be  paid  in  full.  Secretary  McCulloch 
obtained  the  means  to  pay  them  chiefly  by  the  issue  of  7-30  Treas 
ury  notes,  which  were  negotiated  under  the  general  agency  of  Jay 
Cooke,  at  par.  The  amount  required  for  this  purpose  was  very 
large,  and  the  amount  of  7-30  Treasury  notes  outstanding  in 
October,  1865,  after  paying  the  army  was  $830,000,000,  which 
were  convertible  in  three  years  into  5-20  six  per  cent,  bonds.  The 


201 

public  debt  daring  that  month  run  up  to  about  the  highest  figures 
it  ever  reached.  The  following  is  a  statement  of  the  debt,  with 
out  deducting  funds  in  the  Treasury,  as  it  stood  on  the  books  of 
the  Treasury  Department  on  the  31st  of  October,  1865, 

STATEMENT    OF    THE    PUBLIC    DEBT. 

Bonds,  10-40's,  live  per  cent,  due  in  1904 $172,770,100  00 

Bonds,  Pacific  Railroad,  6  per  cent.,  due  in  1895 1,258,000  00 

Bonds,  5-20's,  6  per  cent.,  due  in  1882, 1884  and  1885 659,259,600  00 

Bonds,  6percent.,  due  in  1881 265,347,400  00 

Bonds,  5  per  cent.,  due  in  1880 18,415,000  00 

Bonds,  5  per  cent,  due  in  1874 20,000,000  00 

Bonds,  5  per  cent,  due  in  1871 7,022,000  00 

$1,144,072,100  00 

Bonds,  6  per  cent. ,  due  in  1868 . . . . , $    8, 908, 341  80 

Bonds,  6  per  cent,  due  in  1867 9,415,250  00 

Compound  interest  notes,  due  in  1867-'68  173,012,141  00 

7-30  Treasury  notes,  due  in  1867  and  1868  830,000,000  00—  1,021,335,732  80 

Bonds,  Texas  indemnity,  part  due. 760,000  00 

Bonds,  Treasury  notes,  etc.,  part  due...          613,920  09—          1,373,920  09 

Temporary  loans,  ten  days'  notice 99,107,745  46 

Certificates  of  indebtedness,  due  in  1866.     55,905,000  00 

Treasury  notes,  5  per  cent.,  Dec.  J,  1865.     32,536,901  00—      187,549,646  46 

United  States  notes 428,160,56900 

Fractional  currency 26, 057,469  20—      454, 218, 038  20 

Total  debt  October  31,  1865 $2,808,549,437  55 


National  bank  notes  issued $185,000,000  00 

State  bank  notes  issued 65,000,000  00 

Total  bank  circulation $250,000,000  00 

TARIFF    AND    INTERNAL    REVENUE    LAWS. 

The  act  of  July  1,  1862,  called  the  INTERNAL  REVENUE  LAW, 
was  passed,  providing  for  a  levy  of  duties  on  various  domestic 
manufactures,  upon  trades  and  occupations,  and  also  providing  a 
system  of  stamp,  license,  income,  and  other  duties.  And  the  act 
of  July  14th,  of  the  same  year,  largely  increased  the  duties  on 
imports.  These  laws  were  from  time  to  time  amended  and 
enlarged,  until  large  sums  were  realized  from  this  mode  of  taxa 
tion,  and  formed  a  very  substantial  basis  on  which  to  rest  the 
credit  of  the  Government  for  the  large  issue  of  notes,  bonds  and 
other  obligations.  Enough  money  was  realized  from  these  sources 
to  pay  the  ordinary  expenses  of  the  Government,  all  the  interest 
on  the  war  debt,  and  liquidate  a  considerable  portion  of  the  prin 
cipal.  The  total  debt,  October  31,  1865,  was  over  $2,800,000,000, 
and  it  does  not  at  the  present  time  much  exceed  $2,500,000,000, 
exclusive  of  Pacific  Railroad  bonds. 


202 

CONTRACTION  OF  THE  CURRENCY. 

Secretary  McCuLLOCH,  in  his  first  annual  report,  4th  of  Decem 
ber,  1865,  expressed  the  opinion  "  that  the  legal  tender  acts  were 
war  measures,  passed  in  a  great  emergency;  that  they  should  be 
regarded  only  as  temporary;  that  they  ought  not  to  remain  in 
force  a  day  longer  than  would  be  necessary  to  enable  the  people 
to  prepare  for  a  return  to  the  gold  standard;  and  -t-h«*«4he  work  of 
retiring  the  notes  which  have  been  issued,  should  be  commenced 
without  delay,  and  carefully  and  persistently  continued  until  all 
are  retired."  The  House  of  Representatives  on  the  18th  Decem 
ber,  1865,  concurred  in  these  views,  expressed  in  the  annual 
report  of  Mr.  McCulloch,  by  the  adoption  of  the  following  resolu 
tion  offered  by  Mr.  Alley,  of  Massachusetts : 

Resolved,  That  this  House  cordially  concurs  in  the  views  of  t^ie  Secretary 
of  the  Treasury  in  relation  to  the  necessity  of  a  contraction  of  the  cur 
rency,  with  a  view  to  as  early  a  resumption  of  specie  payments  as  the 
business  interests  of  the  country  will  permit;  and  we  hereby  pledge 
co-operative  action  to  this  end  as  speedily  as  possible. 

The  above  resolution  was  passed  by  the  following  vote — yeas 
144,  nays  6,  as  follows: 

Messrs.  Alley,  Allison,  Ames,  Ancona,  Anderson,  James  M. 
Ashley,  Baldwin,  Banks,  Barker,  Baxter,  Beaman,  Bergen,  Bid- 
well,  Bingham,  Blow,  Boutwell,  Boyer,  Brandegee,  Brooks, 
Broomall,  Bundy,  Reader  W.  Clarke,  Sidney  Clarke,  Conkling, 
Cook,  Cullom,  Darling,  Dawes,  Dawson,  Defrees,  Delano,  Dem- 
ing,  Dennison,  Dixon,  Driggs,  Eldridge,  Eliot,  Farquhar,  Ferry, 
Finck,  Garfield,  Grider,  Griswold,  Hale,  Aaron  Harding,  Abner 
C.  Harding,  Hart,  Hayes,  Henderson,  Higby,  Hill,  Hogan, 
Holmes,  Hooper,  Hotchkiss,  Asahel  W.  Hubbard,  Chester  D. 
Hubbard,  Demas  Hubbard,  John  H.  Hubbard,  Edwin  N.  Hubbell, 
James  R.  Hubbell,  Hulbard,  James  Humphrey,  Ingersoll,  Jencks, 
Johnson,  Julian,  Kasson,  Kelley,  Kelso,  Kerr,  Ketcham,  Kuyken- 
dall,  Laflin,  Latham,  George  V.  Lawrence,  William  Lawrence, 
Longyear,  Marshall,  Marston,  Marvin,  McClurg,  Mclndoe, 
McKee,  McRuer,  Mercur,  Miller,  Moorhead,  Morrill,  Moulton, 
Myers,  Niblack,  Nicholson,  Noell,  O'Neill,  Orth,  Paine,  Patter 
son,  Perham,  Phelps,  Pike,  Plants,  Price,  Radford,  Samuel  J. 
Randall,  William  H.  Randall,  Raymond,  Alexander  H.  Rice,  John 
H.  Rice,  Ritter,  Rollins,  Ross,  Rousseau,  Sawyer,  Scofield,  Shank- 
lin,  Shellabarger,  Sitgreaves,  Sloan,  Spaulding,  Starr,  Stillwell, 
Strouse,  Taber,  Taylor,  Thornton,  Trimble,  Trowbridge,  Upson, 
Van  Aernam,  Burt  Van  Horn,  Robert  T.  Van  Horn,  Voorhees, 


203 

Ward,  Warner,  Elihu  15.  Washbnrn,  William  B.  Washburn, 
Welkcr,  Wentworth,  Whalcy,  Williams,  James  F.  Wilson,  Stephen 
F.  Wilson  and  Wright— 144. 

;Xays — Messrs.  Baker,  Cobb,  Eckley,  Harris,  Smith,  and 
Thayer — 6. 

In  order  to^jurry,  into  effect  the  above  resolution,  Congress,  by 
the  act  of  3{ffirofe*12,  1866,  authorized  the  Secretary  of  the  Treas 
ury  to  exchange  bonds  for  notes,  but  "that  of  United  States  notes 
not  more  than  $10,000,000  should  be  retired  and  canceled  within 
six  months  from  the  passage  of  the  act,  and  thereafter  not  more 
than  $4,000,000  should  be  retired  in  any  one  month." 

Under  the  provisions  of  this  act  the  Secretary  commenced 
retiring  and  canceling  legal  tender  notes,  but  contraction  very  soon 
began  to  affect  speculators  and  the  debtor  class  of  the  community, 
who  raised  a  cry  against  the  course  pursued  by  the  Secretary.  As 
contraction  gradually  went  on,  money  became  more  in  demand, 
and  it  soon  became  unpopular  with  a  large  class  of  the  community. 
Members  of  Congress  very  soon  changed  their  opinions  on  the 
subject,  and  in  January,  1868,  a  law  was  passed,  declaring  "that 
from  and  after  its  passage,  the  authority  of  the  Secretary  of  the 
Treasury  to  make  any  reduction  of  the  currency  by  retiring  or 
canceling  United  States  notes,  shall  be  and  is  hereby  suspended." 

Before  this  law  was  passed  Secretary  McCulloch  had  reduced 
the  circulation  of  United  States  notes  down  to  about  $356,000,000, 
which  at  this  time  (April,  1869),  is  the  amount  outstanding,  and 
for  which  the  Government  is  still  liable,  besides  fractional  cur 
rency  amounting  to  over  $36,000,000. 

THE    PUBLIC    FAITH. 

Since  the  close  of  the  war  there  has  been  considerable  discussion 
in  regard  to  the  meaning  of  the  words  used  in  the  legal  tender 
act. 

It  has  been  insisted  by  a  large  class  of  citizens  that  the  5-20 
bonds  might,  after  five  years,  be  redeemed  in  legal  tender  notes, 
instead  of  gold  and  silver.  Others  insisted  that  the  bonds  are 
payable  in  "dollars,"  which  means  gold  and  silver  coin,  and  that 
an  attempt  to  pay  in  legal  tender  notes  would  not  be  payment  but 
merely  changing  the  form  of  the  debt.  That  a  matured  debt  can 
not  be  discharged  by  another  promise;  that  it  is  contrary  to 
reason  that  a  bond  should  be  paid  in  an  inferior  obligation ;  and 
that  it  would  be  unjust  to  force  inconvertible  paper,  without  inter 
est,  in  payment  of  an  interest-bearing  obligation,  especially  as  the 


204 

right  was  given  in  the  original  act  to  fund  legal  tender  notes  at 
any  time  in  the  bonds  which  were  authorized  by  the  same  act. 
Taking  up  bonds  not  due  with  greenback  notes,  would  simply  be 
to  unfund  a  debt  already  funded,  which  would  be  contrary  to  the 
whole  spirit  and  intent  of  the  legal  tender  act. 

To  remove  all  doubt  upon  the  subject,  and  with  a  view  to 
improve  the  public  credit,  Mr.  Shenck,  Chairman  of  the  Commit 
tee  of  Ways  and  Means,  reported  a  bill,  which,  after  a  lengthy 
discussion,  was  amended,  and  finally  passed  both  Houses  of 
Congress. 

t  The  following  is  the  vote  by  which  it  passed  the  House.     Yeas 
97,  nays  47. 

Yeas — Messrs.  Allison,  Ambler,  Ames,  Armstrong,  Arnell, 
Asper,  Axtell,  Bailey,  Banks,  Beaman,  Benjamin,  Bennett,  Bing- 
ham,  Blair,  Boles,  Boyd,  Buffinton,  Burdett,  Cessna,  Churchill, 
Cobb,  Cook,  Conger,  Cowles,  Cullom,  Dawes,  Donley,  Duval, 
Dyer,  Farnsworth,  Ferriss,  Ferry,  Finckelnburg,  Fisher,  Fitch, 
Gilfallan,  Hale,  Hawley,  Heaton,  Hoar,  Hooper,  Hotchkiss, 
Jenckes,  Jones  (N.  C.),  Judd,  Julian,  Kelsey,  Ketcham,  Knapp, 
Laflin,  Lash,  Lawrence  (Ohio),  Lynch,  Maynard,  McCrary,  Mc^ 
Grew,  Mercur,  Moore  (111.),  Moore  (N.  J.),  Morrill  (Me.),  Neg- 
ley,  O'Neill,  Packard,  Paine,  Palmer,  Phelps,  Poland,  Pomeroy, 
Prosser,  Roots,  Sanford,  Sergeant,  Sawyer,  Schenck,  Scofield, 
Sheldon,  Smith  (Ohio),  Smith  (Vt.),  Smythe  (Iowa),  Stokes, 
Stoughton,  Strickland,  Tanner,  Tillman,  Twichell,  Upson,  Van 
Horn,  Ward,  Washburn  (Wis.),  Washburn  (Mass.),  Welker, 
Wheeler,  Whittemore,  Wilkinson,  Willard,  Williams,  Winans — 97. 

Nays — Archer,  Beatty,  Beck,  Briggs,  Bird,  Burr,  Butler 
(Mass.),  Butler  (Tenn.),  Cobb,  Coburn,  Crebs,  Dewees,  Dickin 
son,  Eldridge,  Getz,  Golladay,  Hawkins,  Holman,  Hopkins,  John 
son,  Jones  (Ky.),  Kerr,  Knott,  Marshall,  Maj^hem,  McCormick, 
McNeely,  Moffett,  Mungen,  Niblack,  Orth,  Reading,  Reeves, 
Rice,  Shanks,  Smith  (Oregon),  Stevenson,  Stiles,  Stone,  Strader, 
Sweeney,  Taffe,  Trimble,  Tyner,  Van  Trump,  Wilson  (Ohio), 
Winchester,  Woodward — 48. 

The  bill  was  approved  by  President  Grant  on  the  18th  of 
March,  1869,  and  was  the  first  act  approved  by  him  after  his 
inauguration,  and  is  as  follows : 

"An  Act  to  strengthen  the  public  credit  of  the  United  States. 

Be  it  enacted,  etc.,  That  in  order  to  remove  any  doubt  as  to  the  purpose 
of  the  Government  to  discharge  all  its  obligations  to  the  public  creditors, 


205 

and  to  settle  conflicting  questions  and  interpretations  of  the  law,  by  virtue 
of  which  such  obligations  have  been  contracted,  it  is  hereby  provided  and 
declared  that  the  faith  of  the  United  States  is  solemnly  pledged  to  the 
payment  in  coin,  or  its  equivalent,  of  all  the  obligations  of  the  United 
States  not  bearing  interest,  known  as  United  States  notes,  and  of  all  the 
interest-bearing  obligations,  except  in  cases  where  the  law  authorizing 
the  issue  of  any  such  obligations  has  expressly  provided  that  the  same 
may  be  paid  in  lawful  money,  or  in  other  currency  than  gold  and  silver ; 
but  none  of  the  said  interest-bearing  obligations,  not  already  due,  shall 
be  redeemed  or  paid  before  maturity,  unless  at  such  times  as  United  States 
notes  shall  be  convertible  into  coin  at  the  option  of  the  holder,  or  unless 
at  such  time  bonds  of  the  United  States,  bearing  a  lower  rate  of  interest 
than  the  bonds'  to  be  redeemed,  can  be  sold  at  par  in  coin.  And  the  United 
States  also  solemnly  pledges  its  faith  to  make  provision  at  the  earliest  practicable 
period  for  the  redemption  of  the  United  States  notes  in  coin.  • 

Approved  March  18,  1869.  U.  S.  GRANT." 

DECISIONS  OP  THE  COURTS  ON  THE  CONSTITUTIONALITY  OF  THE  ACT. 

In  most  of  the  States  where  the  constitutionality  of  the  legal 
tender  act  has  been  raised,  the  State  Courts  have  decided  that  the 
law  was  constitutional  and  valid.  The  decisions  in  such  cases 
were  generally  made  upon  the  ground  that  the  United  States  had 
express  power  to  wage  war,  to  raise  and  support  armies  and 
navies ;  to  borrow  money  on  the  credit  of  the  United  States ;  and 
pass  all  laws  necessary  and  proper  to  carry  into  execution  these 
great  powers.  In  borrowing  money  to  carry  on  the  war,  it  was 
necessary  and  proper  for  the  Government  to  give  its  notes  for  the 
amount  borrowed;  that  Congress  had  the  right  to  affix  to  such 
notes  the  attributes,  and  prescribe  the  terms  which  would  give 
most  value  and  the  greatest  facility  to  their  negotiation,  in  order 
to  obtain  the  necessary  means  of  sustaining  the  army  and  navy 
in  the  prosecution  of  the  war;  that  it  was  a  form  of  credit  justified 
by  the  exigency  of  the  crisis,  and  necessary  to  the  execution  of 
the  war  powers  expressly  granted  in  the  Constitution.  And  that 
upon  the  authority  of  Chief- Justice  Marshall,  "Congress  must 
possess  the  choice  of  means,  and  must  be  empowered  to  use  any 
Cleans  which  are  in  fact  conducive  to  the  exercise  of  the  powers 
granted  by  the  Constitution." 

The  Court  of  Appeals,  the  highest  Court  in  the  State  of  New 
York,  decided  in  the  case  of  Myer  vs.  Rosevelt,  27  N.  Y.  Rep., 
400,  "  that  the  power  to  borrow  money  on  the  credit  of  the  United 
States,  carries  with  it  the  power  to  attach  the  quality  of  a  legal 
tender  to  the  notes  issued,  when,  in  the  judgment  of  Congress,  it 
is  necessary  to  make  them  effectual  for  the  purpose  of  bor 
rowing.  " 

Judge  Davies,  in  his  opinion,  says : 


206 

"We  take  notice  of  the  fact,  that  to  maintain  armies  and  provide  a  navy 
for  the  prosecution  of  the  war,  more  money  is  needed  annually  than  all 
the  specie  within  the  United  States,  and  that  a  resort  by  the  Government 
to  the  use  of  its  own  credit,  was  not  only  a  matter  of  necessity,  but  the  result 
has  demonstrated  that  it  was  a  measure  of  prudence  and  wisdom." 

The  issue  of  Treasury  notes  under  the  Constitution  commenced 
during  the  last  war  with  Great  Britain.  On  the  30th  of  June, 
1812,  the  first  act  was  passed.  Further  issues  were  authorized  by 
the  acts  of  Congress  of  February  25,  1813;  March  4,  and  Decem 
ber  26,  1814;  October  12,  1837;  January  31,  and  August  31,  1842; 
July  22,  1846,  and  January  28,  1857.  In  Thorndike  vs.  The 
United  States,  (2  Mason,  1,  18,)  Judge  Story  said: 

"By  the  statutes  of  the  United  States,  under  which  the  Treasury  notes 
have  been  from  time  to  time  issued,  it  is  enacted  that  such  notes  shall  be 
receivable  in  payment  to  the  United  States,  for  duties,  taxes  and  sales  of 
public  lands,  to  the  full  amount  of  the  principal  and  interest  accruing  due 
on  such  notes.  It  follows,  of  course,  that  they  are  a  legal  tender  in  pay 
ment  of  debts  of  this  nature  due  to  the  United  States,  and  by  the  very 
tenure  of  the  acts,  public  officers  are  bound  to  receive  them." 

The  legality  of  the  issue  of  Treasury  notes  has  been  sanctioned 
by  all  the  departments  of  the  Government  since  1812,  but  the 
United  States  Supreme  Court  has  not  yet  decided  that  Treasury 
notes  can  be  made  "lawful  money  and  a  legal  tender  in  payment 
of  all  debts  public  and  private,"  but  on  the  contrary  it  has  decided 
that  contracts  expressly  payable  in  coin,  must  be  paid  in  coin. 

COIN    CONTRACTS    DECLARED    VALID. 

The  Court  of  Appeals  in  the  State  of  New  York,  in  the  case  of 
Bronson  vs.  Rhodes,  went  so  far  as  to  decide  that  a  contract  made 
before  the  passage  of  the  legal  tender  act,  payable  expressly  "in 
gold  and  silver  coin,  lawful  money  of  the  UnitedjStates,"  might 
be  paid  and  satisfied  by  a  tender  of  United  States  notes,  issued 
under  the  act  of  February  25,  18G2. 

But  the  U.  S.  Supreme  Court  at  Washington  reversed  this 
decision.  Chief  Justice  Chase  announced  the  opinion  of  the 
Court  on  the  15th  of  February,  1869,  as  follows: 

"  This  is  an  appeal  from  a  judgment  of  the  Court  of  Appeals  of  the 
State  of  New  York,  holding  that  a  tender  of  Treasury  notes  for  the  satis 
faction  of  a  mortgage  made  in  1851,  by  its  terms  to  be  satisfied  in  gold  and 
silver  coin,  was  sufficient.  The  tender  was  made  in  January,  18G5,  when 
a  dollar  in  coin  was  equal  to  two  dollars  and  twenty-five  cents  in  legal 
tender  notes,  and,  the  tender  being  refused,  action  was  commenced  to 
compel  the  cancellation  of  the  mortgage.  The  Supreme  Court  of  the 
State  subsequently  adjudged  the  mortgage  paid,  and  required  it  to  be  sat 
isfied  of  record,  holding  the  tender  to  have  been  sufficient.  The  Court  of 


207 

Appeals  affirm  that  judgment,  and  the  affirmance  is  here  for  review.  The 
Chief  Justice  delivered  the  opinion  of  the  Court,  holding  that  it  is  the 
duty  of  courts  of  justice  to  enforce  contracts  according  to  the  intent  of 
the  parties  to  them ;  and  in  this  case  it  is  held  that  it  is  clear  that  the 
intent  of  the  parties  was  that  payment  should  be  made  in  coin.  There 
were  two  descriptions  of  money  in  use  at  the  time  the  tender  in  this  case 
was  made,  both  authorized  by  law,  and  both  made  legal  tender.  The 
general  denomination  of  both  descriptions  was  dollars,  but  they  were 
essentially  unlike  in  nature.  The  coined  dollar  was  a  piece  of  gold  or 
silver  of  a  certain  degree  of  purity  and  weight.  The  note  dollar  was  a 
promise  to  pay  a  coined  dollar,  but  not  on  demand,  nor  at  any  fixed  time, 
nor  was  it  convertible  into  a  coined  dollar.  It  was  impossible,  in  the 
nature  of  things,  that  these  two  dollars  should  be  equivalents  of  each 
other,  nor  did  the  currency  act  purport  to  make  them  so.  There  were 
then  two  descriptions  of  money  issued  by  the  same  Government,  and  con 
tracts  to  pay  either  were  equally  sanctioned  by  law.  ]STo  question  can  be 
made  as  to  this  fact ;  doubt  concerning  it  can  only  spring  from  that  con 
fusion  of  ideas  which  always  attends  the  introduction  of  varying  and 
uncertain  measures  of  value  into  circulation  as  money.  In  the  absence 
of  any  specific  control  for  the  payment  of  coin,  legal  tender  notes  may  be 
a  sufficient  tender,  but  it  is  clear  to  the  Court  that  express  contracts  for 
the  payment  of  coined  dollars  can  only  be  satisfied  by  the  payment  of 
coined  dollars.  They  are  not  debts  which  may  be  satisfied  by  the  tender 
of  Treasury  notes.  As  to  the  judgments  to  be  entered  on  contracts  for 
the  payment  of  coin,  it  is  said  the  difficulty  arises  in  the  supposition  that 
damages  can  be  assessed  in  only  one  description  of  money;  but  where 
there  are  two  kinds  of  currency  provided  by  law,  it  is  necessary,  in  order 
to  avoid  ambiguity  and  prevent  a  failure  of  justice,  to  render  judgment 
for  coined  money  where  the  contract  provides  for  payment  in  coined 
money.  Where  no  specified  description  of  money  is  made,  judgments 
maybe  entered  generally  without  such  specification.  Judgment  below 
reversed. 

Mr.  Justice  Miller  dissented,  holding  that,  although  it  was  the  intention 
of  the  parties  that  gold  should  be  paid,  it  was  only  so  because  gold  was 
then  the  currency  of  the  Government,  the  lawful  money  of  the  United 
States,  mentioned  in  the  contract.  There  was  nothing  in  the  contract  to 
make  it  differ  from  any  other  ordinary  contract  payable  in  dollars.  When 
Treasury  notes  became  lawful  money  of  the  United  States,  their  tender 
was  suflicient  to  discharge  the  contract,  and  within  its  terms  and  within 
the  understanding  and  intention  of  the  parties.  This  decision  in  no  way 
affects  the  legal  tender  cases  argued  by  Mr.  Potter  and  the  Attorney  Gen 
eral  at  the  present  term  of  the  Court,  although  argued  at  the  time  of  the 
argument  of  those  cases." 

The  constitutional  question  has  been  argued  and  is  still  pend 
ing  before  the  Supreme  Court  of  the  United  States:  "was  Con 
gress  authorized,  under  the  extraordinary  exigencies  of  the  war, 
to  make  United  States  notes  fitted  for  circulation  as  currency, 
'  lawful  money  and  a  legal  tender  in  payment  of  all  debts,  public 
and  private  ?' "  The  business  men  of  the  country  are  anxiously 
waitino-  for  the  highest  tribunal  under  the  Government  to  answer 

O  *^ 

this  question. 


208 

CONCLUSION. 

Having  completed  the  Historical  narrative  of  the  origin,  prog 
ress  and  development  of  the  system  of  Finance  adopted  during 
the  rebellion,  and  which  furnished  the  means  of  prosecuting  to  a 
successful  issue  the  greatest  civil  war  known  in  the  history  of  the 
human  race,  some  reflections  on  the  subject  may  not  be  unin 
teresting. 

At  the  breaking  out  of  hostilities,  the  financial  affairs  of  the 
banks  and  people  were  in  a  remarkably  good  condition,  except, 
perhaps,  in  some  of  the  Northwestern  States,  where  the  banks 
were  badly  organized. 

L,In  the  Atlantic  cities  the  banks  were  never  in  a  better  condi 
tion.  The  balances  were  settled  through  the  Clearing  House,  in 
New  York  and  other  cities,  with  great  regularity.  There  was 
paper  currency  and  gold  and  silver  enough  to  do  the  legitimate 
business  of  the  country.  Bank  notes  were  regularly  convertible 
at  the  will  of  the  holder  into  specie,  and  to  a  large  extent  these 
notes  were  redeemed  in  New  York,  Boston  and  other  Atlantic 
cities.  The  financial  machinery  and  credit  institutions  of  the 
country  were  in  a  prosperous  condition,  and  there  was  no  lack  of 
means  for  legitimate  wants. 

It  was  not  long  after  the  war  began  before  it  became  apparent 
to  the  best  financial  men  of  the  country,  that  a  financial  system 
adequate  to  the  wants  of  the  nation  in  time  of  peace,  was  wholly 
inadequate  to  meet  the  requirements  of  a  great  war;  that  the  war 
was  a  new  and  great  business  of  itself,  demanding  new  and  addi 
tional  facilities,  greater  even  than  existed  before  the  war.  That 
the  facilities  for  carrying  on  the  business  of  the  country  as  they 
existed  before  the  war,  were  still  necessary  to  carry  on  that  busi 
ness,  and  could  not  safely  be  withdrawn  from  it;  and  that  a  new 
currency,  national  in  character,  and  to  some  extent  a  new  finan 
cial  sj^stem,  must  be  created  to  meet  the  new  and  enlarged  demands 
of  the  war  which  had  been  forced  upon  the  country.  This  was  an 
exigency  not  foreseen,  and  the  Government  was  obliged  to  exer 
cise  all  the  power  it  possessed  in  passing  the  war  measures  detailed 
in  the  foregoing  narrative. 

The  plan  of  Finance  adopted  in  1861-2  was  successful,  and 
proved  adequate  to  these  enlarged  requirements.  The  Govern 
ment  was  maintained  and  the  Union  preserved.  By  this  plan  all 
the  men  and  material  of  war  necessary  to  crush  the  rebellion  were 
obtained  without  difficulty.  Many  mistakes  were  m'ade  in  the 


209 

conduct  of  the  war,  but  the  financial  plan,  including  taxation,  was 
an  ample  resource  sufficient  at  all  times  to  meet  the  vast  require 
ments  of  the  War  and  Navy  Departments.  The  credit  of  the 
Government  was  brought  into  immediate  action  in  the  most  avail 
able  form.  Some  mistakes  were  also  made  by  the  Secretary  of 
the  Treasury  in  administering  the  Loan  acts,  and  too  large  an 
inflation  occurred  in  1864,  which  might  have  been  prevented  by 
continued  funding  in  5-20  six  per  cent,  bonds,  yet  in  the  main  the 
financial  management  during  the  war  was  a  decided  success, 
because  it  carried  the  country  through  the  terrible  ordeal,  and 
brought  the  ship  of  state  safely  into  port.  It  is  true  that  this 
plan  was  not  at  all  in  accordance  with  peace  notions  of  finance, 
but  by  it  all  officers,  soldiers,  sailors  and  marines  were  paid  in 
full,  and  all  demands  for  supplies  and  material  of  war  were 
promptly  discharged.  It  was  a  complete  success  as  a  means  of 
carrying  into  effect  the  war  powers  of  the  Government.  These 
facts  abundantly  prove  the  efficiency  and  wisdom  of  the  plan 
adopted  in  bringing  the  war  to  a  successful  termination.  Although 
successful  it  was  a  heavy  drain  upon  the  resources  of  the  country, 
and  at  times  very  embarrassing  to  business  men,  and  they  had  to 
submit  to  many  sacrifices.  The  withdrawal  of  such  a  large  num 
ber  of  youthful  laboring  men  into  a  vast  army  of  unproductive 
labor,  and  the  mistake  made  in  the  over-issue  of  paper  currency, 
so  inflated  prices  as  to  materially  increase  the  expenses  of  the 
war.  It  also  embarrassed  the  people  engaged  in  legitimate  pur 
suits;  laborers  struck  for  higher  wages,  and  the  price  of  com 
modities  greatly  increased,  causing  considerable  difficulty  in 
keeping  up  the  productive  energies  of  the  country,  especially  in 
establishments  where  large  gangs  of  men  are  employed. 

Nor  can  it  be  denied  that  the  management  of  the  fiscal  affairs 
of  the  Government,  both  legislative  and  executive,  during 
the  war,  was  a  material  departure  from  sound  political  economy, 
applicable  to  ordinary  times  of  peace.  The  demand  for  money 
means  forced  upon  the  country  by  such  a  gigantic  rebellion,  was 
wholly  unprecedented — nothing  ever  recorded  in  history  equaled 
this  demand — and  reached  to  such  overwhelming  amounts,  so 
vastly  beyond  any  former  financial  requirements,  that  the  careful 
observer  cannot  but  look  back  with  wonder  and  amazement  that 
the  Government  was  at  all  able  to  pass  successfully  through  such 
an  extraordinary  crisis.  The  authorization  of  a  loan  of  $900,- 
000,000,  in  one  act,  and  an  increase  of  the  public  debt  in  one 


210 

year  of  over  $940,000,000,  over  and  above  custom  duties  and 
internal  taxes,  are  matters  of  history.  The  amount  of  the  issue 
of  paper  currency  and  temporary  obligations  in  various  forms 
was  almost  appalling.  Considerably  over  one  million  of  men 
were  at  one  period  of  the  war  withdrawn  from  productive  labor. 
The  strain  upon  the  credit  of  the  Government,  with  eleven  States 
practically  out  of  the  Union,  was  very  great.  It  would  seem  that 
no  other  country  could  have  borne  up  under  such  a  sudden  expan 
sion  of  the  credit  circulation,  and  the  changing  of  so  many  men 
from  producers  to  destroyers  of  life  and  property.  This  great 
inflation  of  the  paper  medium  had,  however,  some  compensating 
advantages.  It  stimulated  into  wonderful  activity  all  the  pro 
ductive  energies  of  common  labor,  skilled  labor,  and  machinery 
of  all  kinds.  War  material  was  produced  with  amazing  rapidity, 
and  in  abundant  quantity,  for  equipping,  supporting  and  moving 
all  the  great  armies  in  the  field  and  navies  afloat.  The  people 
never  flagged,  hesitated,  or  faltered  in  producing  and  furnishing 
all  these  vast  war  materials,  and  receiving  in  exchange  for  it  the 
promises  issued  to  them  by  the  Government.  They  seemed  to  be 
getting  rich  by  the  operation,  and  although  it  was  to  some  extent 
unreal,  yet  this  stimulus,  aided  by  patriotic  determination  to 
maintain  the  Union,  was  great  enough  to  induce  the  people  to 
furnish  every  thing  necessary  to  supply  the  army  and  navy  to 
crush  the  rebellion,  at  the  mouth  of  the  cannon  and  point  of  the 
bayonet.  No  compromise  was  made.  Superior  force,  backed  by 
powerful  and  abundant  resources,  accomplished  this  great  achieve 
ment.  The  army  and  navy  were  powerful  and  victorious,  because 
they  were  sustained  by  all  the  vast  resources  of  the  country, 
brought  to  their  aid  voluntarily,  and  by  the  superior  power  of  the 
Government  which  commanded  these  resources.  These  bold  and 
decisive  financial  measures  gave  power  and  dignity  to  the  Govern 
ment,  and  although  it  operated  upon  the  unwilling  as  a  forced 
loan,  the  crisis  demanded  it;  it  was  the  price  of  the  national 
Union ;  the  national  faith  is  pledged,  and  every  dollar  of  this  debt 
must  be  paid,  principal  and  interest,  in  gold  and  silver. 

The  value  of  the  Union  and  the  Government  preserved  in  full 
vigor  under  the  Constitution,  cannot  be  estimated  in  dollars  and 
cents.  It  is  above  all  price.  A  vast  continent,  embracing  terri 
tory  and  people,  is  now  held  under  the  control  of  a  mighty  central 
and  consolidated  Government,  based  upon  the  will  of  an  enter 
prising,  intelligent  and  powerful  people.  The  mind  of  man  is 


211 

incapable  of  estimating  the  futur.e  progress  and  destiny  of  the 
American  people  under  such  a  Government  wisely  administered. 
But  in  a  financial  and  economical  aspect,  these  vast  sums  expen 
ded  present  an  entirely  different  view.  Viewed  simply  as  an 
economical  question,  the  immense  war  debt  represents  only  lives 
and  property  consumed.  All  the  unproductive  labor,  vast  material 
of  war,  provisions  and  supplies  of  all  kinds  are  used  up,  wasted 
and  blotted  out  of  existence.  This  immense  debt  rolled  up  during 
four  years  of  bloody  war,  stands  out  in  bold  demand  upon  the 
nation  for  liquidation  from  the  future  earnings  and  income,  of  the 
people.  Future  labor  and  economy  must  furnish  the  means  for 
its  payment.  This  debt  is  the  price  of  the  Union  and  Constitu 
tional  Government,  but  their  value  cannot  be  estimated  in  dollars. 
The  Government  value  is  intangible  and  not  present  as  a  means  of 
payment,  but  the  war  debt  is  already  tangible ;  the  bills  are  footed 
up,  and  the  total  amount  is  over  $2,500,000,000. 

This  sum  must  be  paid,  principal  and  interest,  not  by  the  issue 
of  new  promises  to  pay  it,  but  by  the  production  of  actual  value, 
measured  by  gold  and  silver,  the  world's  commercial  standard,  as 
well  as  the  standard  regulated  by  law. 

To  illustrate  more  fully.  When  individuals  in  commercial 
transactions  give  their  notes,  bonds  or  other  promises  to  pay 
money,  they  usually  receive  in  exchange  either  real  or  personal 
property,  or  labor,  which  is  made  valuable  in  some  form  to  pay 
the  obligation  given  for  it.  Not  so  with  the  war  debt;  the  prop 
erty  received  and  services  performed  for  the  United  States  notes 
and  obligations,  outstanding,  has  not,  in  a  financial  sense,  been 
employed  in  such  a  useful  way  as  to  furnish  present  value  to  pay 
them  with,  but  on  the  contrary  it  was  consumed  by  the  war. 
Hence  the  difference  between  a  debt  created  for  commercial  pur 
poses  and  a  war  debt.  The  one  is  generally  for  property  or  labor 
made  useful  and  productive,  while  the  other  is  for  unproductive 
labor  or  property  consumed,  wasted  or  destroyed  not  for  any 
pecuniarily  useful  purpose. 

Immediately  after  the  war  began  we  commenced  our  departure 
from  the  gold  standard,  for  the  reason  that  every  dollar  expended 
for  the  waste  of  war  was  expended  for  a  pecuniarily  unproductive 
purpose.  Every  dollar  expended  took  out  of  existence  a  dollar  of 
value  for  which  the  Government  gave  its  promise  to  pay.  Every 
dollar  of  property  thus  destroyed  led  us  farther  and  farther  away 
from  the  specie  standard,  and  has  to  be  produced  again  by  labor 


212 

before  the  value  is  restored.     In  one  year,  from  July  1,  1864,  to 
July  1,  18^5, 

The  Expenditures  of  the  War  Department  were $1,031,323,360  79 

For  Navy  Department 122,567,776  12 

Total  waste  of  War  in  one  year $1,153,891,136  91 

The  history  of  the  human  race  shows  no  such  consumption  and 
waste  in  any  war  during  a  single  year.  One  billion,  one  hundred 
and  fifty-three  million,  eight  hundred  and  ninety-one  thousand,  one 
hundred  and  thirty-six  dollars  and  ninety-one  cents  expended  in  one 
year!  '  At  the  close  of  this  year,  July  1,  1865,  and  the  close  of 
active  hostilities,  one  dollar  in  gold  was  worth,  in  greenbacks, 
1.41,  at  the  Broker's  Board  in  New  York.  All  the  bonds  and 
greenback  promises  to  pay  dollars,  now  outstanding,  do  not  rep 
resent  tangible  property  or  means  owned  by  the  Government,  but 
property  in  the  possession  of  the  people  under  its  jurisdiction,  and 
from  which  all  this  waste  must  be  reproduced  again,  and  the  value 
restored,  in  order  to  bring  us  to  the  specie  standard  and  enable 
us  to  pay  the  debt.  In  -short,  the  debt  must  be  paid  from  the 
earnings  and  income  of  the  people,  in  some  form  of  taxation  to  be 
enforced  by  the  Government. 

It  was  fortunate  that  the  debt,  during  the  war  and  since,  was 
^-distributed  to  a  large  extent  among  all  classes  of  people.  In  fact, 
this  was  the  only  way  in  which  the  resources  necessary  to  sustain 
the  war  could  be  obtained.  The  legal  tender  notes  were  paid  out 
and  distributed  to  the  army  and  navy  and  for  supplies  and  mate 
rial  of  war.  Certificates  of  indebtedness  and  interest-bearing 
Treasury  notes,  were  alsa  paid  out  to  contractors  and  others. 
The  loans  were  negotiated  by  direct  appeals  to  the  people  to  sub 
scribe  in  large  and  small  amounts.  The  great  body  of  the  people 
in  the  loyal  states  took  up  the  loans;  and  became  directly  interes 
ted  in  sustaining  the  Government,  and  the  great  diffusion  of  the 
notes,  bonds  and  certificates  all  over  the  country,  was  the  only 
way  in  which  the  enormous  debt  so  suddenly  created  could  be 
carried  through  to  the  close  of  the  war.  The  greenback  notes 
were  very  popular  among  the  people.  It  was  a  currency  in  daily 
use,  uniform  in  value,  and  passed  freely  in  every  state.  It  was 
the  people's  loan  to  the  Government,  without  interest,  and  was  at 
the  same  time  advantageous  to  them,  because  it  was  money  in  all 
business  transactions.  It  immediately  became  the  people's  war. 
All  became  pecuniarily  intrusted  in  its  success,  and  they  furnished 
the  means  to  carry  it  on.  The  crushing  of  the  rebellion  was  the 


213 

people's  triumph;  and  the  people  will  in  due  time  pay  the  debt, 
and  thereby  preserve  the  honor  and  good  faith  of  the  nation. 

Notwithstanding  the  great  destruction  of  values  consequent 
upon  the  prosecution  of  the  war,  the  nation  was,  at  its  close,  still 
possessed  of  great  power  and  resources,  and  the  material  interests 
of  the  Northern  and  Western  States  were  still  advancing.  They 
continue  to  advance ;  and  now  that  peace  and  order  are  restored, 
and  the  whole  country  North  and  South  have  a  common  interest 
and  a  common  destiny,  will  continue  to  advance.  There  is  a 
rapid  increase  of  population;  new  fields  of  enterprise  are  contin 
ually  opening,  adding  new  strength  and  ability  to  the  people  to 
work  back  to  the  specie  standard,  and  ultimately  pay,  without 
embarrassment,  every  dollar  of  the  debt  incurred  in  maintaining 
the  national  Union. 

To  make  this  more  plain  the  following  estimate  of  the  increase 
of  the  population  of  the  United  States  is  submitted. 

According  to  the  rate  of  increase  in  past  years,  our  population 
will  advance  in  the  following  proportion : 

In  1870 42,000,000,  In  1880 56,500,000, 

In  1890 76,500,000,  In  1900 103,600,000, 

In  1910 138,900,000. 

The  vast  means  for  prosecuting  the  war  to"  a  successful  issue 
were  furnished  by  a  population  not  over  20,000,000.  The  popula 
tion  subject  to  the  jurisdiction  of  the  national  Government  and 
giving  it  support  in  1870,  will  be  double  what  it  was  in  1862. 
The  resources  of  the  country  will  increase  with  as  great  rapidity 
as  its  population.  New  and  improved  systems  of  communication 
are  expanding  in  all  directions;  the  Atlantic  and  Pacific  slopes 
will  very  soon  be  bound  together  by  iron  bands  "across  the  con 
tinent;"  the  mechanic  arts,  improved  machineiy,  with  agricultural, 
mineral  and  commercial  facilities  fully  developed,  will  carry  the 
nation  so  rapidly  forward  in  power  and  resources,  that  nothing 
need  prevent  the  Government,  if  wisely  and  economically  admin 
istered,  from  retiring  the  legal  tender  notes  within  a  reasonable 
time,  and  as  early  as  the  year  1900,  pay  the  last  dollar  of  the  debt 
incurred  in  crushing  the  greatest  rebellion  known  in  the  world's 
history,  and  without  retarding  the  growth  and  prosperity  of  the 
great  Republic. 


P  P  E  1ST  D I X  . 


MR.   SPAULDING'S  SPEECH  ON  THE  NATIONAL  CURRENCY  BANK  BILL, 

FEBRUARY    10,     18  OH. 

•'Mr.  SPEAKER — This  is  a  very  important  bill,  and  I  may  be  indulged 
in  a  few  remarks  upon  its  scopef  and  objects.  I  have  already  stated  in 
the  debate  on  the  finance  bill  that  I  had  no  doubt  of  the  constitutionality 
of  the  national  bank  bill  proposed  by  the  Secretary  of  the  Treasury,  nor 
had  I  any  doubt  that  State  banks  were  also  constitutional ;  that  both  sys 
tems  of  banking  might  be  useful  within  their  sphere  of  action,  and  that  I 
was  willing  that  the  country  should  have  both  kinds  of  banking;  that 
inasmuch  ag  the  National  Government  had  hitherto  failed  to  establish  a 
permanent  sjrstem  of  national  banking,  State  banks  had,  as  a  necessary 
means  of  commerce  and  the  operations  of  State  governments,  become 
firmly  established,  and  that  the  Supreme  Court  of  the  United  States,  by 
repeated  decisions,  held  that  they  were  constitutional  and  legitimate  State 
institutions. 

The  coercive  features  in  the  pending  bill  against  State  banks  having 
been  stricken  out,  I  intend  to  give  it  my  vote;  not  because  I  think  it  will 
afford  any  considerable  relief  to  the  Treasury  in  the  next  two  or  three 
years,  or  that  it  will  in  any  manner  lessen  the  issue  of  paper  mone}r,  but 
because  I  regard  it  as  the  commencement  of  a  permanent  system  for  pro 
viding  a  national  currency  that  will,  if  wisely  administered,  be  of  great 
benefit  to  the  people,  and  a  reliable  support  to  the  Government  in  the 
future. 

The  President,  in  his  annual  message,  and  the  Secretary  of  the  Treas 
ury,  in  his  annual  report,  recommend  the  passage  of  a  free  banking  law, 
authorizing  the  issue  of  a  national  currency  which  shall  be  of  uniform 
value  in  all  parts  of  the  country,  and  to  be  secured  by  a  pledge  of  United 
States  stocks,  deposited  in  the  Treasury  of  the  United  States.  The  bill,  in 
all  its  essential  features,  is  like  the  free  banking  law  of  the  State  of  !N"ew 
York,  which  has  been  in  successful  operation  in  that  State  since  1838. 
Legal  tender  notes  issued  direct  from  the  Treasury,  without  the  agency 
of  a  bank,  constitute  a  national  currency  uniform  in  value,  in  all  parts  of 
the  United  States,  and  bearing  no  interest,  is  an  advantageous  loan  to  the 
Government  by  the  people  who  receive  and  circulate  this  kind  of  cur 
rency.  These  legal  tender  notes  are  based  solely  on  the  faith  of  the 
Government  and  all  the  taxable  property  under  the  jurisdiction  of  the 
United  States.  If  Congress  performs  its  duty  by  imposing  taxes  on  this 
property,  and  the  Executive  enforces  the  collection  thereof,  all  these  notes 
will  be  ultimately  redeemed  and  retired  from  circulation. 


These  notes  are  declared  by  law  to  be  money,  and  they  circulate  as 
money  in  all  parts  of  the  United  States.  The  free  banking  law  is  pro 
posed  by  the  Executive  for  the  purpose  of  combining  private  capital  with 
the  credit  of  the  Government  in  the  issue  of  bank  bills,  similar  in  all 
respects  to  legal  tender  notes.  The  only  difference  between  them  will  be 
that  the  legal  tender  notes  have  only  the  United  States  Government  to 
provide  for  their  redemption,  while  the  bank  bills,  when  issued,  will  have, 
in  addition  to  the  liability  of  the  Government,  the  direct  promise  of  the 
banking  associations  issuing  them  that  they  will  redeem  them  on  present 
ation  at  the  bank,  not  in  specie,  certainly,  during  the  suspension  of  specie 
payments,  but  in  legal  tender  notes,  and  after  a  general  resumption  of 
specie  payments  by  the  banks  and  the  Government,  then  to  be  redeemed 
in  coin.  Legal  tender  notes  issued  direct  from  the  Treasury  constitute  a 
loan  to  the  Government  without  interest.  Bank  notes,  under  this  bill, 
would  be  loaned  to  the  Government  and  the  people  at  six  and  seven  per 
cent,  interest.  We  give  to  the  banking  associations  the  interest  on  the 
national  currency  issued  by  them,  as  an  inducement  to  them  to  form  these 
associations  and  become  liable  for  its  redemption.  Instead  of  the  Gov 
ernment  issuing  this  national  currency  direct  to  the  soldiers  and  other 
creditors  without  interest,  it  sells  its  own  six  per  cent,  bonds  to  the  bank 
ing  associations,  and  takes  its  pay  in  legal  tender  notes;  the  banking 
associations  take  the  six  per  cent,  bonds  from  the  Secretary  of  the  Treas 
ury  and  deposit  them  with  the  Treasurer,  and  thereupon  the  Comptroller 
of  the  Currency  furnishes  to  such  banking  associations  the  national  cur 
rency,  the  Treasurer  holding  the  bonds  as  security  for  their  Redemption. 

This  national  circulation  is,  then,  money  owned  by  such  associations, 
like  any  other  bank  bills.  They  may  be  loaned  to  the  people  or  the  Gov 
ernment,  like  any  other  money  belonging  to  a  bank ;  and  when  loaned, 
the  banking  associations  get  six  or  seven  per  cent,  interest  for  its  use. 
The  associations  also  draw  the  interest  on  the  bonds  previously  hypoth 
ecated  with  the  Treasurer.  By  this  operation  the  associations  gain,  first, 
six  per  cent,  interest  on  its  loans ;  and  second,  six  per  cent,  interest  on  the 
bonds  hypothecated  with  the  Treasurer.  In  this  way  the  banking  asso 
ciations  get  ten  or  twelve  per  cent,  gross  interest  per  annum,  and  the 
Government  pays  six  of  it  on  the  bonds  sold  to  the  associations,  and 
which  are  hypothecated  with  the  Treasurer.  The  Government  gives  this 
bonus  and  the  privileges  of  banking  to  capitalists,  to  induce  them  to  com 
bine  their  credit  with  the  credit  of  the  Government  in  issuing  this 
national  currency,  and  providing  for  its  redemption,  during  suspension, 
in  legal  tender  notes,  and  after  resumption  of  specie  payments,  in  coin. 
The  Secretary  of  the  Treasury,  in  his  annual  report,  recommends  '  the 
organization  of  banking  associations  to  supply  circulation  secured  by 
national  bonds,  and  convertible  always  into  United  States  notes,  and  after 
resumption  of  specie  payments  into  coin.' 

The  additional  advantages  held  out  by  the  bill  to  induce  rich  men,  men 
of  accumulated ,  capital,  to  join  the  Government  in  maintaining  this 
national  currency,  are : 

1.  The  national  character  given  to  the  bills  to  circulate  at  par  in  all 
parts  of  the  United  States. 

2.  It  is  made  receivable  at  par  for  all  internal  taxes  and  all  other  dues 
to  the  Government,  except  customs,  and  payable  to  the  army  and  navy, 
and  all  other  creditors  of  the  Government. 

3.  The  banking  associations  are  to  be  exempt  from  all  State  and  United 


3 

States  taxation,  and  only  pay  two  per  cent,  per  annum  for  en 
paper,  and  printing  their  circulating  notes,  and  which  is  to  include 
other  expenses  of  the  Currency  Bureau  at  Washington. 

On  a  full  review  of  this  proposed  plan  of  a  national  currency, 
seen  that  it  is  based  on  public  and  private  faith;  that  it  proposes  to 
bine  the  interest  of  the  nation  with  the  rich  individuals  belonging  to 
^Icn  of  surplus  capital  only  can  profitably  engage  in  the  business  of  bank 
ing.  If  speculators  and  adventurers,  without  positive  capital,  attempt  to 
bank  under  this  bill  they  will  fail.  Money-lenders,  and  not  money-bor 
rowers,  can  successively  organize  and  manage  banking  associations  under 
the  provisions  of  this  act. 

How  far  it  will  be  found  practicable  to  extend  the  organization  of  asso 
ciations  on  the  credit  of  the  public  and  of  individuals,  can  only  be  ascer 
tained  by  the  experiment.  A  banking  association  of  $100,000,000  capital, 
all  paid  in  by  wealthy  individuals,  and  firmly  established  in  the  city  of 
Xe\v  York,  and  acting  as  the  fiscal  agent  of  the  Treasury  Department, 
would  be  a  most  valuable  support  to  the  credit  of  the  Government.  It 
might  be  made  the  depository  for  all  the  public  moneys  in  that  city. 
It  might  receive  the  public  moneys  derived  from  loans,  from  customs  and 
internal  taxes,  and  disburse  all  these  moneys  to  the  creditors  of  the  Gov 
ernment.  This  would  give  the  moneyed  men  wrho  are  stockholders  of  the 
bank  an  immediate  pecuniary  interest  in  upholding  the  credit  of  the  Gov 
ernment.  Similar  organizations  in  Boston,  Philadelphia,  New  Orleans, 
and  other  principal  cities  of  the  Union  might  be  made  with  less  amount  of 
capital,  and,  in  like  manner,  become  fiscal  agents  of  the  Government  in 
those  cities.  The  Bank  of  England  is  a  striking  example  of  the  combined 
power  of  public  authority  and  private  influence  in  sustaining  the  credit  of 
the  Government.  We  may  safely  profit  by  this  example.  This  bank  has 
been  the  chief  agent  in  sustaining  the  British  Government  in  the  long  and 
exhausting  wars  in  which  she  has  been  engaged.  The  Bank  of  England 
is  the  fiscal  agent  of  the  British  Government,  and  notwithstanding  it  is  a 
bank  of  discount,  deposit  and  circulation,  it  has  thus  far  received  and  dis 
bursed  the  public  moneys  without  the  loss  of  a  dollar  of  the  money 
entrusted  to  it. 

It  is  also  well  known  that  our  Government  never  lost  any  of  the  money 
deposited  in  the  first  or  second  Bank  of  the  United  States.  They  were 
both  fiscal  agents  of  the  Government.  All  the  public  money  was  received 
and  disbursed  by  them  with  fidelity  and  usefulness  to  both  parties. 
Sound  and  well-managed  banks  tend  to  increase  public  and  private  credit, 
and  extend  as  well  as  to  facilitate  commerce  with  States  and  individuals. 
They  stimulate  industry,  commodities  are  multiplied,  agriculture,  mining, 
and  manufactures  flourish;  these  constitute  the  true  wealth,  greatness, 
and  prosperity  of  the  country. 

I  have  no  doubt  that  the  framers  of  the  Constitution  contemplated  a 
national  currency  adequate  to  the  wants  of  the  general  Government,  and 
that  for  all  national  purposes  it  has  the  power  to  control  and  regulate  the 
currency.  In  all  Government  transactions  it  has  the  right  not  only  to 
provide  by  law  for  issuing  the  kind  of  currency  that  shall  be  received  for 
taxes,  custom  duties,  and  all  other  dues  to  the  United  States,  but  also  the 
kind  of  money  that  shall  be  paid  to  the  army  and  navy,  and  all  other 
creditors  of  the  Government.  If  there  had  been  established  years  ago  a 
sound  national  bank  of  $200,000,000  capital,  which  had  been  in  full  opera 
tion  as  the  fiscal  and  financial  agent  of  the  Government  at  the  time  of  the 


breaking  out  of  the  present  rebellion,  what  a  mighty  support  it  would 
have  been  in  sustaining  the  Government  at  the  present  time !  The  inde 
pendent  Treasury  law  unnecessarily  isolated  the  Government  from  all  the 
capitalists  and  the  accumulated  capital  of  the  country. 

At  the  very  outset  of  this  rebellion  there  was  no  money  in  the  Sub- 
Treasury,  and,  notwithstanding  the  hostility  heretofore  and  now  manifes 
ted  toward  State  banks,  the  Government  was  obliged  to  resort  at  once  to 
the  State  banks  in  New  York,  Boston  and  Philadelphia,  for  money  to 
prosecute  the  war.  The  States  had  fostered  and  built  up  strong  State 
institutions,  while  the  general  Government  had  been  vacillating  and  weak 
ened  by  conflicting  views  and  opinions  as  to  the  constitutionality  and 
policy  of  a  national  bank.  It  is  now  most  apparent  that  the  policy  advo 
cated  by  Alexander  Hamilton,  of  a  strong  central  Government,  was  the 
true  policy.  A  strong  consolidated  Government  would  most  likely  have 
been  able  to  avert  this  rebellion;  but  if  not  able  to  prevent  it  entirely,  it 
would  have  been  much  better  prepared  to  have  met  and  put  down  the 
traitorous  advocates  of  secession  and  State  rights,  who  have  forced  upon 
us  this  unnatural  and  bloody  war.  A  sound  national  bank,  upheld  and 
supported  by  the  combined  credit  of  the  Government  and  rich  men 
residing  in  all  the  States  of  the  Union,  would  have  been  a  strong  bond  of 
Union  before  the  rebellion  broke  out,  and  a  still  stronger  support  to  the 
Government  in  maintaining  the  army  and  navy  to  put  it  down. 

Sir,  the  United  States  Government  has  thus  far  established  no  perma 
nent  system  of  national  currency  except  that  of  gold  and  silver.  Ever 
since  the  adoption  of  the  Constitution  there  has  been  a  conflict  of  opinion 
among  the  ablest  statesmen  of  the  country  upon  the  question  of  a  national 
currency.  Jefferson  opposed  the  creation  of  all  banks,  both  State  and 
national.  Alexander  Hamilton  proposed  a  national  bank  during  the 
struggle  for  American  independence  in  1780,  but  his  suggestions  were  not 
then  adopted.  During  Washington's  administration,  in  1701,  the  first 
Bank  of  the  United  States  was  incorporated,  mainly  under  the  influence 
of  Mr.  Hamilton,  which  continued  in  operation  until  1811,  when  its  char 
ter  expired.  Xo  national  bank  was  in  existence  during  the  second  war 
with  Great  Britain.  That  war  was  carried  on  by  loans  and  by  the  issue 
of  Treasury  notes.  In  1816,  the  second  Bank  of  the  United  States  was 
chartered,  and  continued  in  existence  until  1836,  when  its  charter  again 
expired.  All  will  remember  the  decided  opposition  of  General  Jackson  to 
its  re-charter,  and  the  fierce  struggle  that  ensued  between  the  friends  and 
opponents  of  a  United  States  bank.  The  friends  of  the  bank  were  finally 
beaten  when  Jackson  was  re-elected  President  in  the  fall  of  1832.  The 
friends  of  a  United  States  bank  again  rallied  in  1840-41.  but  were  again 
defeated  by  the  veto  of  John  Tyler.  In  1846  the  independent  Treasury 
law  was  finally  adopted,  by  which  it  was  established  that  the  operations 
of  the  Government  should  thereafter  be  carried  on  wholly  in  gold  and 
silver  coin,  and  that  this  money  of  the  Government  should  be  kept  sepa 
rate  from  all  banks  and  banking  transactions.  Thus  the  law  continued  up 
to  the  session  of  the  present  Congress. 

No  settled  policy  has  as  yet  been  established  by  which  the  Government 
has  assumed  permanent  control  over  the  national  currency.  State  banks 
still  go  on  issuing  circulating  notes,  selling  exchange,  discounting  prom 
issory  notes  and  bills,  and  receiving  deposits,  and  the  Sub-Treasury  law 
is  still  unrepealed.  A  national  currency,  adequate  to  the  operations  of  the 
Government  in  peace  and  war,  has  yet  to  be  established.  It  seems  that  the 


present  is  a  propitious  time  to  euact  this  great  measure  as  a  permanent 
system,  and  that  the  duty  of  the  Government  in  providing  a  national  cur 
rency  shall  no  longer  be  neglected. 

Sir,  the  Government  of  the  United  States  ought  not  to  depend  on  State 
institutions  for  the  execution  of  its  great  powers.  In  the  administration 
of  the  high  prerogatives  conferred  by  the  Constitution,  this  Government 
need  not  depend  at  all  upon  State  officers,  State  institutions,  or  State  laws. 
Its  own  powers  and  its  own  means,  if  brought  into  active  exercise,  are 
fully  adequate  to  the  ends  for  which  the  Government  was  established.  In 
the  long  interval  of  peace  many  of  the  powers  granted  in  the  Constitution 
have  not  been  fully  exercised,  nor  was  it  necessary  during  peace  to  put 
them  fully  into  execution.  But  now,  when  engaged  in  a  gigantic  war, 
when  the  very  existence  of  the  Government  is  in  such  imminent  peril,  it 
is  of  the  highest  importance  that  it  should  exert  all  those  great  powers  to 
maintain  itself,  preserve  its  own  dignity,  and  enforce  its  own  prerogatives. 
Congress  and  the  Executive  cannot  fail  now  to  do  all  in  their  power  to 
save  the  Government  and  restore  the  national  Union. 

Sir,  this  Government  has  power  to  issue  a  national  currency  entirely 
independent  of  State  authority;  power  to  support  armies  independent  of 
Governors  of  States  or  State  laws;  power  to  provide  and  maintain  a  navy 
in  like  manner;  and  power  to  regulate  commerce  with  foreign  nations, 
among  the  several  States,  and  with  the  Indian  tribes.  These  great  powers 
may,  by  means  of  proper  legislation,  be  made  to  operate  directly  upon  the 
people  independently  of  State  boundaries  or  State  sovereignty.  Under  the 
power  k  to  raise  and  support  armies '  we  may  provide  for  calling  the  able- 
bodied  men  of  the  nation  directly  into  the  army  of  the  United  States,  and 
without  the  aid  of  Governors  of  States;  and  in  like  manner  the  navy  may 
be  increased.  As  a  necessary  means  for  '  supporting '  such  an  army  and 
'  maintaining '  such  a  navy,  we  may  provide  for  the  issue  of  a  national 
currency,  through  the  agency  of  banks,  or  by  the  issue  of  legal  tender 
notes  direct  from  the  Treasury.  Either  mode  will  require  about  the  same 
amount  of  currency  to  be  issued  to  pay  the  army  and  navy;  either  mode 
will  be  constitutional;  and  it  is  in  the  sound  discretion  of  Congress  to 
decide  which  is  the  best  mode  of  providing  the  means  for  carrying  on  the 
Government  in  the  present  exigency. 

Sir,  all  the  powers  conferred  011  the  general  Government  are  self-acting, 
self-sustaining,  and  wholly  independent  of  State  authority;  and  when 
enforced  by  men  of  will,  strong  nerves,  enlightened  self-reliance,  energy, 
and  ability  sufficient  to  put  them  into  active  exercise,  are  fully  adequate 
to  the  putting  down  of  this  gigantic  rebellion  and  maintaining  the  Consti 
tution  and  lawrs  over  all  the  thirty-four  States  and  the  Territories  included 
in  the  national  Union.  The  duty  of  putting  these  constitutional  powers 
into  active  exercise  devolves  upon  Congress  and  the  Executive.  Congress 
cannot  fail  to  perform  every  duty  devolved  upon  it  in  the  present  great 
emergency. 

In  the  absence  of  a  national  bank  the  State  banks  have  been  liberal  in 
making  loans  to  the  Government  since  the  Avar  begun.  It  has  been  ascer 
tained  from  reliable  data  that  on  the  19th  day  of  January,  1863,  the  banks 
in  the  State  of  New  York  alone  held  United  States  securities  to  the  amount 
of  $153,637,174;  being  $45,000,000  more  than  the  entire  capital  of  all  the 
banks  in  the  State,  their  capitals  being  only  $108,606,062.  This  shows  the 
ability  and  willingness  of  the  banks  in  New  York  to  support  the  Govern 
ment  in  her  present  peril.  There  is  in  the  present  imperiled  condition  of 


the  Union  more  distrust  of  the  stability  of  the  general  Government  than 
there  is  of  the  State  Governments.  Some  doubt  exists,  owing  to  divisions 
at  the  North,  as  to  our  final  success  in  crushing  the  rebellion.  Could  you 
make  it  certain  that  the  Union  will  be  preserved,  and  the  national  juris 
diction  maintained  over  all  the  thirty-four  States  and  the  $16,000,000,000 
of  taxable  property  therein,  which  is  liable  for  our  public  debt,  excluding 
therefrom  the  debt  of  the  rebel  government,  said  to  be  $900,000,000,  the  six 
per  cent,  bonds  of  the  United  States  would  not  be  five  per  cent,  below  par, 
while  the  six  per  cent,  bonds  of  the  State  of  New  York  are  worth  a  pre 
mium  of  twenty-eight  per  cent.  Capitalists  are  naturally  timid,  and  will 
hesitate  about  entering  into  new  projects  until  they  can  see  the  way  clear. 
They  desire  to  know  that  the  Union  is  to  be  maintained  and  the  Govern 
ment  perpetuated.  Being  fully  assured  of  this,  your  bonds  wrill  be  imme 
diately  above  par,  and  there  will  be  less  difficulty  in  organizing  banking 
associations  and  carrying  this  act  into  effect. 

Sir,  banking  is  eminently  a  practical  business.  To  be  successful,  it  must 
be  based  on  accumulated  capital,  and  conducted  by  practical  men,  who 
are  intimately  acquainted  with  the  commerce  and  business  of  the  country. 
Finance  and  financial  questions  must  all  be  finally  brought  to  a  practical 
standard.  However  fine  spun  the  theories  of  visionary  men  may  be,  they 
cannot  now  be  relied  on  to  provide  money  in  the  present  exigency  to  pay 
the  army  and  navy  and  other  needy  creditors  of  the  Government.  Cm- 
plan  of  finance  must  be  simple,  efficient  and  practical.  It  consists  of  two 
parts,  debts  and  taxation,  namely : 

1.  Contracting  debts  for  the  supply  of  the  army  and  navy,  issuing  legal 
tender  notes,  and  borrowing  money  in  some  form  on  the  faith  of  the  Gov 
ernment. 

2.  Taxation  on  the  entire  property,  commerce,  and  business  of  the 
country,  amply  sufficient  to  pay  the  principal  and  interest  of  all  the  debts 
which  have  been  or  may  be  contracted  on  the  faith  of  the  Government. 

Sir,  no  theories  can  be  imagined,  nor  shifts  made  that  will  be  allowed  to 
evade  the  tariff  on  imports  and  internal  taxes  on  property  and  business 
adequate  to  the  payment  of  the  entire  debt  contracted,  both  principal  and 
interest.  The  property  and  business  of  the  country  are  amply  sufficient 
for  this  purpose;  but  it  will  require  a  strong,  stable  Government,  wisely 
administered,  to  adjust  and  enforce  the  collection  of  so  large  an  amount 
of  taxes  as  will  be  required  to  pay  the  extraordinary  war  debt  that  must 
be  contracted  to  crush  the  rebellion  and  restore  peace  and  tranquility  over 
the  whole  Union.  I  have  no  doubt  that  the  patience  and  energies  of  the 
people  are  to  be  taxed  to  the  utmost  before  the  Union  is  restored  and  we 
be  assured  of  future  loyalty  in  all  the  southern  States.  You  are  not  yet 
able  to  collect  taxes  in  the  disloyal  States  without  the  aid  of  a  powerful 
army.  Before  you  can  be  assured  of  loyalty  in  the  rebellious  States,  Union 
State  Governments  must  be  established  and  maintained  in  each  of  them. 
To  do  this  will  require  a  large  army  for  many  years.  Until  you  can  col 
lect  your  taxes  in  all  the  rebel  States  without  the  aid  of  military  force  the 
rebellion  is  not  subdued. 

Many  of  our  friends  express  sanguine  expectations  of  immediate  relief 
from  the  passage  of  this  national  bank  bill,  and  I  should  be  much  gratified 
to  know  hereafter  that  their  expectations  have  been  fully  realized.  But, 
sir,  in  my  judgment,  the  Secretary  of  the  Treasury  must  not  place  too 
much  reliance  upon  this  plan.  It  will  not  give  much  relief  to  the  Treasury 
for  one,  two,  or  three  years.  It  will  not  to  any  considerable  extent, 


supersede  the  necessity  for  the  issue  of  Treasury  notes.  It  will  go  into 
operation  slowly.  The  Government  having  heretofore  failed  to  provide  a 
national  currency,  the  State  banks  in  the  older  States  have  been  organized, 
become  deeply  rooted,  and  firmly  established.  It  will  take  a  long  time  to 
supplant  these  banks.  Every  coercive  or  violent  attempt  to  do  so  will  do 
more  harm  than  good.  This  new  system  will  come  in  competition  not 
only  with  existing  institutions,  but  will  encounter  the  prejudices  of  a  large 
class  of  people  who  are  hostile  to  banks,  and  especially  hostile  to  a  United 
States  bank.  It  will  be  towards  the  close  of  the  war,  when  the  Govern 
ment  is  firmly  established  and  its  authority  respected  in  all  the  States, 
that  it  will  be  most  valuable  in  providing  a  way  for  funding  the  public 
debt  and  establishing  a  permanent  system  of  national  currency.  It  is 
chiefly  on  this  ground  that  I  am  induced  to  support  the  bill  at  this  time. 
It  is  more  for  the  benefits  to  be  realized  in  the  future  than  during  the 
pending  war  that  I  am  induced  to  give  it  my  support. 

Debt  and  taxation  are  the  inevitable  necessities  of  war.  Hence  the 
importance  of  a  reunion  of  all  parties  in  a  vigorous  prosecution  of  the  war, 
in  order  to  crush  the  rebellion  in  the  shortest  time  and  with  the  least  pos 
sible  expenditure  of  blood  and  treasure.  This  is  the  only  way  to  stop  the 
burdens  and  calamities  of  the  present  war.  Fight  vigorously  and  in 
earnest  while  the  war  lasts.  Every  consideration  of  duty  and  patriotism 
require  all  the  loyal  people  to  come  at  their  country's  call,  to  fight  the 
rebels  forthwith,  by  all  the  means  within  the  range  of  civilized  warfare,  to 
save  us  from  a  protracted  war,  save  the  further  effusion  of  blood,  and  stop 
the  vast  expenditures  which  must,  unless  speedily  terminated,  burden 
present  and  future  generations. 

We  need  more  economy  in  the  management  of  the  war.  It  is  manifest 
there  is  not  that  close  supervision  and  scrutiny  over  the  expenditures  that 
are  necessary.  Every  man  in  the  service  should  be  required  to  perform 
with  fidelity  the  duties  devolved  upon  him.  All  supernumerary  officers 
and  men  should  be  dispensed  with.  All  disbursing  officers  should  be  held 
to  a  rigid  economy  and  strict  accountability.  As  we  approach  the  termi 
nation  of  this  war  the  expenses  must  be  greatly  reduced,  and  preparation 
made  for  a  resumption  of  specie  payments.  Our  public  debt  will  then 
appear  in  all  its  vast  proportions,  for  it  must  all  be  paid  ultimately  in  gold 
and  silver.  This  makes  it  necessary  for  us  to  cut  off  all  unnecessary 
expenses  of  every  kind. 

Every  day  that  the  war  is  prolonged  the  debt  is  largely  increased.  The 
daily  increasing  debt  of  $2,500,000  must  all  be  raised  by  taxation  in  some 
form,  or  the  debt  will  not  be  paid.  The  Government  is  spending  at  a 
fearful  rate  the  accumulations  of  former  years  of  prosperity.  Every  dollar 
of  debt  contracted  becomes  a  first  mortgage  upon  the  entire  property  and 
productive  industry  of  the  country.  It  affects  the  farmer,  laborer, 
mechanic,  manufacturer,  merchant,  banker,  commission  merchant,  pro 
fessional  man,  and  retired  capitalist.  Every  pound  of  tea,  coffee  and 
sugar  used  is  taxed  to  pay  the  expenses  of  the  war,  and  the  persons  using 
these  articles  of  daily  consumption  pay  the  tax  in  the  increased  price. 
Every  person  that  uses  wine,  brandy,  whisky,  beer,  cigars,  or  tobacco, 
pays  a  portion  of  the  war  tax.  All  necessary  articles  of  dress,  such  as 
shoes,  boots,  hats,  and  wearing  apparel,  are  taxed  in  like  manner,  and  all 
superfluous  and  unnecessary  articles,  such  as  silks,  laces,  diamonds  and 
jewelry,  are  heavily  taxed,  and  I  would  be  glad  to  see  the  tax  still  further 
increased  on  them,  in  order  to  prevent,  if  possible,  their  use  at  this  time. 


8 

Every  person  that  rides  upon  the  railroads,  reads  a  newspaper,  draws  a 
check,  or  sends  a  telegraphic  message,  is  taxed  for  war  purposes.  But  1 
need  not  further  enumerate  the  different  modes  in  which  every  body  is 
taxed  every  day  to  pay  the  expenses  of  the  war. 

Sir,  this  war  debt  is  a  mortgage  alike  on  all  the  productive  industry  and 
property  of  Republicans,  Democrats,  old  line  Whigs,  conservatives,  and 
abolitionists.  All  these  classes  of  persons  are  taxed  alike  to  pay  the  war 
debt.  Every  Democrat  or  Republican  who  chews  tobacco,  drinks  beer  or 
bad  whiskey  in  the  sixth  ward  of  New  York  pays  his  proportion  of  the 
war  debt,  the  same  as  the  conservative  who  drinks  his  choice  wine  on  the 
Fifth  Avenue.  This  war  tax  is  already  beginning  to  be  noticed  by  the 
people;  but  as  the  war  is  procrastinated,  and  the  debt  increased,  the 
burden  will  be  more  deeply  felt.  While  we  are  running  along  at  forty 
miles  an  hour,  under  the  pressure  of  irredeemable  paper,  necessarily  issued 
and  circulated  to  prosecute  the  war,  the  present  taxation  is  easily  paid, 
and  there  is  a  seeming  prosperity;  but  I  can  assure  gentlemen  that  a 
reckoning  day  will  surely  come.  Look  at  the  immense  army  in  the  field, 
their  commissariat,  supply  vessels,  supply  trains,  ambulance  corps,  sutlers, 
teamsters,  hangers-on,  idlers  and  assistants  of  all  kinds,  extending  over  a 
line  of  military  operations  of  more  than  four  thousand  miles,  and  you  will 
be  impressed  with  two  important  facts  : 

1.  The  enormous  expenditures  necessary  to  their  present  support,  and 
the  future  bounties  and  pensions  that  must  be  paid. 

2.  The  number  of  men  that  are  withdrawn  from  industrial  pursuits, 
and  the  consequent  loss  of  productive  industry  which  ought  to  be  added 
to  the  wealth  of  the  country. 

All  this  immense  army  add  nothing  by  their  labor  to  the  wealth  of  the 
country,  and  the  expense  of  supporting  such  an  army  devolves  upon 
those  wTho  do  labor  and  those  who  have  already  acquired  propert3r. 
What  a  mighty  drain  this  war  is  upon  the  productive  energies  and 
resources  of  the  country.  It  is,  indeed,  an  exhausting  as  well  as  bloody 
Avar.  Whether  it  be  successful  or  unsuccessful,  vast  consequences  are 
involved.  If  terminated  successfully  within  tflree  years,  the  Union  main 
tained  and  the  Government  perpetuated  under  the  Constitution,  the 
results  to  flow  from  such  a  triumph  would  amply  compensate  for  all  this 
expenditure  of  blood  and  treasure.  If  it  terminates  unsuccessfully,  the 
Union  divided  and  the  rebel  government  maintained,  the  war  debt  must 
still  be  paid ;  but  no  man  here  is  wise  enough  to  predict  what  results  will 
follow  such  a  calamity. 

I  am  asked  almost  daily,  will  the  Union  be  maintained  and  the  national 
Government  perpetuated  all  over  the  States  and  Territories  ?  I  cannot 
doubt  that  it  will.  No  efforts  of  mine  certainly  shall  be  wanting  to 
accomplish  so  desirable  a  result.  I  cannot,  however,  shut  my  eyes  to  the 
formidable  character  of  the  rebellion,  nor  to  the  difficulties  in  the  way  of 
accomplishing  such  a  result.  The  inherent  difficulties  of  conquering  and 
subduing  so  large  and  intelligent  a  people,  extending  over  such  a  wide 
extent  of  territory  as  is  contained  in  the  revolted  States,  are  very  great. 
It  is  very  difficult  to  move  and  supply  large  armies.  An  advance  in  the 
enemy's  country  for  any  considerable  distance  always  involves  the  diffi 
culties  of  keeping  the  rear  line  open  to  the  base  of  supplies.  This  has 
been  demonstrated  in  the  advances  that  have  been  made  in  attempting  to 
take  Richmond.  Even  the  armed  occupation  of  a  part  of  any  one  of  the 
revolted  States  does  not  make  the  people  in  the  State  loyal  to  the  General 


9 

Government.  The  hatred  of  the  people  in  the  rebellious  States  is  deep- 
seated  and  abiding.  They  have  a  separate  de  facto  confederate  govern 
ment,  and  separate  State  governments.  As  States  they  revolted  from  the 
United  States  Government,  and  with  their  State  governments  remaining 
intact  and  in  full  force.  They  still  maintain  their  separate  State  organi 
zations,  with  power  to  enforce  their  State  laws.  This  insurrection  was 
commenced  very  differently  from  most  other  insurrections.  It  was  not 
commenced  by  disorganized  bodies  of  the  people,  but  by  the  constituted 
authority  of  States  in  their  capacity  of  independent  sovereignties.  These 
State  authorities  had  power  to  suppress  immediately  the  Union  senti 
ments  of  the  people  within  their  jurisdiction,  and  to  enact  as  well  as  to 
enforce  any  new  laws  that  might  be  necessary  to  accomplish  their  wicked 
purposes.  Hence  the  formidable  character  of  the  rebellion  at  the  outset. 
It  will  take  a  long  time  to  supplant  the  present  State  organizations  in  the 
revolted  States,  and  to  institute  new  Union  State  governments  in  their 
stead.  It  can  only  be  accomplished  by  armed  force.  It  will  require  a 
large  standing  loyal  army  in  the  actual  occupation  of  each  State.  Until 
Union  State  governments  are  organized  and  permanently  maintained  in 
all  the  Southern  States,  you  cannot  hope  for  a  lasting  peace. 

Sir,  it  is  proper  for  us  to  look  these  difficulties  square  in  the  face.  All 
the  people  in  the  Northern  States  ought  to  look  at  the  formidable  charac 
ter  of  this  rebellion,  and  act  up  to  the  demands  of  the  hour.  It  will 
require  the  active  energies  of  a  united  North  to  maintain  the  integrity  of 
the  Union.  Jt  is  unwise,  ay,  criminal  for  us,  while  incurring  a  debt  of 
$2,500,000  every  day,  to  deceive  ourselves  as  to  the  real  situation.  The 
business  men,  at  a  distance,  are  going  on  making  money,  speculating, 
buying  and  selling,  almost  unconscious  of  the  dangers  that  surround  us. 
Party  organizations  are  maintained,  party  platforms  set  up,  and  a  partisan 
struggle  constantly  made  for  power,  wholly  inconsistent  with  the  mighty 
issues  involved  in  the  present  war.  This  applies  to  all  parties  and  all 
party  organizations.  The  people  in  the  loyal  States,  without  regard  to 
party  distinctions,  have  a  common  interest  and  a  common  destiny;  all  are 
intensely  interested  in  the  deadly  conflict,  all  become  liable  for  the  debts 
contracted  in  the  prosecution  of  the  war,  and  all  must  be  taxed  to  pay  both 
principal  and  interest. 

But,  sir,  the  higher  inspirations  of  duty  and  patriotism  impel  us  to  sus 
tain  the  President  in  a  vigorous  prosecution  of  the  war — a  war  that  has 
been  forced  upon  us  by  ambitious  men,  whose  chief  object  is  power. 
Considerations  infinitely  above  mere  party  or  pecuniary  gains  or  losses 
should  compel  us  to  united  action.  Your  country,  my  country,  is  in  dan 
ger  of  being  divided  and  destroyed.  Oaths  have  been  broken,  the  Consti 
tution  defied,  and  the  laws  trampled  under  feet  of  rebels.  'United  we 
stand,  divided  we  fall.'  I  appeal  to  gentlemen  of  all  parties  to  uphold  and 
sustain  the  constituted  authorities  in  vindicating  the  majesty  of  the  Con 
stitution  and  laws  over  all  the  States  and  Territories,  from  the  great  lakes 
to  the  Gulf  of  Mexico,  and  from  the  Atlantic  to  the  Pacific  oceans.  This 
is  our  country.  Let  it  have  one  national  Government— one  destiny." 

REDEMPTION   OF    NATIONAL    CURRENCY — ASSORTING  HOUSE. 

"BUFFALO,  September  30th,  1865.' 

Dear  Sir—I  am  in  receipt  of  your  favor  of  the  28th  inst.,  asking  me  to 
communicate  my  views  of  the  plan  proposed  by  the  ]S"ew  York  banks  for 
the  redemption  of  national  currency. 


10 

In  reply,  I  would  say  that  I  am  clearly  of  the  opinion  that  a  prompt 
redemption  of  the  national  currency  is  necessary  to  insure  success  and 
permanency  to  the  system.  No  system  of  banking  is  safe  that  does  not 
enforce  rigidly  the  obligation  of  each  bank  to  redeem  its  circulating  notes 
on  demand.  During  the  suspension  of  specie  payments  they  are  required 
to  be  redeemed  in  legal  tender  demand  notes,  and  on  the  resumption  of 
specie  payments  they  must  be  redeemed  in  coin.  This  is  one  of  the 
requirements  of  the  National  Banking  Law,  which  should  be  strictly 
enforced,  and  every  sound  and  well  managed  bank  will  no  doubt  be  able 
and  willing  to  conform  to  this  law,  and  every  weak  and  badly  managed 
bank  should  be  compelled  to  live  up  to  its  requirements.  But  in  stating 
these  general  propositions,  which  no  sound  banker  will  controvert,  it  does 
not  follow  that  a  combination  called  an  Assorting  House  is  the  best  mode 
of  compelling  them  to  fulfill  its  obligation  to  redeem. 

An  Assorting  House  would  require  large  rooms,  a  great  number  of 
clerks ;  they  would  handle  a  large  amount  of  currency,  the  expenses  would 
be  heavy,  and  in  these  times  of  knavery  and  fraud,  the  risk  would  be  very 
great.  And  to  what  end  would  this  assorting  process  be  carried  on? 
Simply  to  separate  the  money  of  each  bank  into  packages  to  be  sealed  up 
and  sent  home  by  an  express  company  for  redemption.  Is  this  necessary  ? 
Is  it  necessary  to  incur  all  this  expense  and  risk  to  secure  a  prompt 
redemption  of  the  national  currency.  Let  us  consider  the  subject  a  little 
more  in  detail,  and  see  if  a  prompt  redemption  of  it  cannot  be  attained 
under  the  law  as  it  now  stands,  or  by  a  proper  amendment  of  it  if  found 
defective. 

In  the  first  place,  it  is  not  necessary  to  assort  and  send  home  this  cur 
rency  for  redemption  so  long  as  it  is  required  by  the  people  to  carry  on 
the  business  operations  of  the  country.  Every  time  a  hundred  dollar  bill 
passes  from  one  person  to  another  it  is  a  practical  redemption  of  it  by  the 
person  who  takes  it.  Every  time  a  merchant  at  Chicago  pays  to  a  farmer 
$500  in  national  currency  for  a  car  load  of  wheat,  the  farmer  by  the  opera 
tion  redeems  such  national  currency,  not  in  greenbacks,  nor  in  gold,  but 
in  a  commodity  better  than  either,  namely  wheat,  a  staple  article  useful 
to  all.  So  every  merchant  in  New  York  that  sells  a  bale  of  cotton  goods 
and  receives  his  pay  for  it  in  currency,  redeems  such  currency,  not  in  the 
way  that  banks  redeem  it,  but  in  cotton  goods,  which  is  far  better  because 
it  performs  the  true  functions  of  money  by  facilitating  the  legitimate  sale 
of  commodities.  So  every  time  that  a  merchant  or  manufacturer  pays  his 
internal  revenue  tax  to  the  United  States  Collector  in  national  currency, 
the  Government  redeems  such  currency  by  receiving  and  discharging  such 
tax.  So  every  mechanic  or  laborer  that  receives  national  currency  for  his 
services,  redeems  such  currency  by  the  labor  performed.  So  it  will  be 
seen  that  just  so  long  as  the  national  currency  is  practically  redeemed 
every  day  in  its  passage  from  hand  to  hand  in  the  payment  of  commodities 
and  services  and  in  the  ramified  operations  of  trade  and  business  both  with 
the  Government  and  the  people  whose  operations  it  greatly  facilitates, 
there  is  not  the  slightest  necessity  for  resorting  to  the  expensive  and  risky 
operation  of  assorting  and  sending  it  home  for  redemption. 

With  a  proper  amendment  to  the  National  Bank  law,  I  am  clearly  of  the 
opinion  that  it  would  be  unwise  to  establish  an  Assorting  House,  and  even 
without  such  amendment,  I  do  not  think  it  good  policy  to  establish  it.  In 
the  first  place  the  Assorting  House  will  be  as  I  have  stated,  attended  with 
great  risk  and  expense.  And  in  the  next  place  it  is  opposed  to  sound 


11 

policy  and  will  have  a  mischievous  effect  upon  the  legitimate  circulation 
of  the  national  currency.  The  leading  object  of  the  national  bank  law  was 
to  furnish  a  currency  of  uniform  value  and  similitude  to  be  used  by  the 
Government  and  people  as  an  instrument  to  facilitate  the  exchange  of  com 
modities  and  services,  and  the  collection  of  internal  taxes,  in  all  parts  of 
the  United  States.  It  is  amply  secured  by  gold  bearing  bonds  deposited 
with  the  Treasurer  of  the  United  States  at  Washington.  Only  ninty  per 
cent,  of  currency  is  issued  on  the  amount  of  bonds  hypothecated,  thus 
leaving  a  margin  of  ten  per  cent,  for  depreciation.  The  Government 
stamps  it  with  the  imprint  of  the  Treasury  and  guarantees  the  ultimate 
payment  of  every  dollar  put  in  circulation  by  any  bank,  whether  such  bank 
is  solvent  or  insolvent.  It  is  made  a  legal  tender  for  all  taxes  and  other 
debts  due  to  the  Government  except  customs,  and  for  all  debts  due  from 
the  Government  except  interest  on  the  funded  debt.  All  national  banks 
are  obliged  by  law  to  receive  it  for  all  debts  due  them,  and  each  national 
bank  depositary  is  further  obliged  to  receive  it  on  all  Government  deposits 
made  in  the  bank  by  any  public  officer.  These  provisions  in  the  bank  law 
give  great  advantages  and  credit  to  the  national  circulation  over  that  of 
State  banks.  These  provisions  of  the  law  provide  to  a  considerable  extent 
for  a  practical  redemption  of  this  currency  in  the  every  day  operations  of  the 
Government  and  people,  not  only  in  New  York,  Boston  and  Philadelphia, 
but  also  in  Charleston,  New  Orleans,  St.  Louis,  Cincinnati,  Chicago  and 
Buffalo,  and  in  every  other  city  and  village  throughout  the  length  and 
breadth  of  the  whole  country.  With  the  facility  thus  given  to  the  national 
currency  to*  circulate  at  par  in  every  part  of  the  United  States,  and  the 
guarantee  of  the  Government  that  every  dollar  of  it  shall  be  paid,  it  passes 
freely  among  all  classes  of  people  and  corporations  without  any  one  stop 
ping  to  enquire  whether  a  particular  bank  is  badly  managed  or  not.  The 
national  currency  with  the  pledged  security  and  guarantee  of  the  Govern 
ment,  is  good  in  any  event,  and  is  not  likely  to  become  a  dead  weight  in 
any  of  the  banks  in  the  principal  cities.  If  a  weak  or  badly  managed  bank 
(like  the  First  National  Bank  of  Attica,  for  instance)  should  fail,  its  cred 
itors  may  be  large  losers  by  the  failure,  but  every  dollar  of  the  circulation 
will  be  paid,  and  the  notes  continue  to  circulate  equally  as  well  after  as 
before  its  failure.  No  one  ever  stopped  taking  the  circulating  notes  of  the 
First  National  Bank  of  Attica,  notwithstanding  its  failure  more  than  six 
months  ago.  It  is  not  the  bill  holder  that  will  lose  by  the  failure  of  a 
national  bank,  but  its  depositors  and  other  creditors,  hence  the  security  of 
national  currency  over  all  other  currency.  Thus  far  the  national  banking 
system  in  respect  to  its  circulation  has  gone  on  smoothly.  All  this  cur 
rency  in  miscellaneous  packages  consisting  of  the  issues  of  banks  in 
Maine,  Minnesota  and  Tennessee,  pass  equally  well  without  being  assor 
ted,  in  all  parts  of  the  United  States.  This  system  of  furnishing  a  circula 
ting  medium  thus  far  works  as  well,  or  better  than  was  anticipated  by  its 
most  sanguine  advocates.  It  is  fulfilling  admirably  the  great  desideratum 
of  a  true  national  currency,  so  long  needed  to  carry  on  successfully  the 
business  of  the  enterprising  people  of  this  great  country. 

I  should  regret  very  much  to  see  a  combination  of  bankers  in  any  of 
the  principle  cities  organize  an  Assorting  House  to  disorganize  the  har 
monious  working  of  this  system  by  assorting  this  currency,  sealing  it  up 
in  separate  packages,  and  sending  it  home  to  each  bank  issuing  it  for 
redemption,  unless  there  should  be  an  imperative  necessity  for  so  doing. 
The  tendency  of  such  an  operation  would  be  to  materially  disturb  the 
financial  operations  of  the  country.  Once  begin  the  operation  of  assort- 


12 

ing  currency  by  a  large  organized  Assorting  House  in  the  city  of  New 
York,  with  a  large  number  of  clerks  under  good  salaries,  and  you  begin 
a  system  that  will  ultimately  draw  into  its  support  every  bank  in  the 
whole  country.  What  will  be  the  operation  of  such  a  combination  ?  In 
the  first  place  it  may  not  be  illegal,  but  is  not  specially  authorized  by  the 
national  law.  In  the  next  place  it  begins  by  the  city  banks  sending  all 
national  currency  received  by  them  to  the  assorting  house,  whether  neces 
sary  or  not,  to  be  assorted,  sealed  up  in  packages,  and  sent  home  to  each 
bank,  cither  through  its  redeeming  agency  or  directly  by  express  to  the 
bank  that  issued  them.  Each  bank,  on  receiving  this  currency  so  sent 
home,  is  obliged  to  provide  for  it  either  in  legal  tender  greenbacks,  which 
are  no  safer  than  national  currency,  or  by  drafts  which  are  at  par  in  New 
York,  but  generally  by  providing  a  fund  in  advance  at  a  bank  in  one  of 
the  principal  cities.  As  the  currency  continues  to  be  assorted  and  sent 
home,  it  creates  the  necessity  for  each  bank  out  of  New  York  to  provide 
more  par  funds  to  be  placed  to  their  credit  ready  for  redeeming  their 
notes  as  they  shall  be  again  assorted  and  sent  home  for  that  purpose. 
These  banks  not  being  able  to  make  exchange  or  par  funds  in  other 
modes,  will  very  soon  begin  to  gather  up  the  circulating  notes  of  other 
banks,  and  especially  notes  issued  by  other  banks  in  their  own  locality, 
and  send  them  to  New  York  for  their  own  credit.  These  notes,  on  reach 
ing  New  York,  will  again  go  immediately  to  the  assorting  house,  and  be 
again  counted,  sealed  up,  and  sent  back  by  express  to  the  country.  As 
this  process  of  sending  money  packages  to  and  from  New  Y^ork  goes  on 
through  the  machinery  of  the  assorting  house,  the  volume  will  continue 
to  increase  until  every  bank  in  the  country  will  be  obliged  to  contribute 
directly  or  indirectly  to  the  support  of  a  combination  unknown  to  the 
law.  It  seems  to  me  that  the  good  to  be  attained  by  any  such  combina 
tions  will  be  greatly  overbalanced  by  the  mischiefs  it  will  create  to  the 
present  harmonious  working  of  the  system.  It  would  no  doubt  be  a 
profitable  business  for  the  express  companies  to  carry  these  money  pack 
ages  to  New  York  and  back  again  to  the  country,  but  I  am  greatly 
puzzled  to  know  how  it  will  be  any  advantage  to  the  people,  the  Govern 
ment,  or  the  banks,  either  in  New  York  or  elsewhere,  to  carry  such  a 
scheme  into  practical  operation.  If  this  combination  is  adopted,  the 
national  currency  issued  by  the  banks  in  New  York  city  which  now  circu 
late  freely  everywhere,  will  be  unnecessarily  returned  upon  them  for 
redemption  under  the  operations  of  their  own  assorting  house.  This  will 
be  one  of  the  legitimate  results  of  the  system  of  assorting  which  cannot  be 
avoided. 

I  watched  with  considerable  care  the  working  of  the  system  instituted 
by  the  Suffolk  Bank  of  Boston  and  the  Metropolitan  Bank  of  New  York, 
compelling  the  old  State  banks  to  redeem  their  circulating  notes  by  a  sim 
ilar  process.  This  was  no  doubt  a  check  against  the  excessive  issues  of 
banks  at  that  time,  especially  to  banks  in  New  England,  which  were  not 
very  strongly  restricted  by  law  as  to  the  amount  of  these  issues,  but  I  very 
much  doubt  whether  even  this  plan  to  coerce  the  redemption  of  even  an 
inferior  currency  did  not  do  more  hurt  in  deranging  the  free  and  legiti 
mate  circulation  thereof  than  it  did  good  in  preventing  excessive  issues. 
It  certainly  afforded  a  fine  business  for  the  express  companies  in  carrying 
money  packages  to  and  from  New  York;  and  it  is  certain  also  that  the 
activity  with  \vhich  these  packages  were  hurried  back  and  forth,  greatly 
accelerated  the  panic  that  occurred  in  August,  September,  and  the  first 


13 

half  of  October,  1857;  until  finally  the  banks  in  New^York,  by  common 
consent,  ceased  sending  it  home,  and  took  this  secured  currency  of  the 
State  of  New  York  and  made  it  a  basis  for  Clearing  House  Certificates, 
which  had  an  important  influence  in  stopping  the  panic  and  restoring 
confidence. 

Upon  a  full  examination  of  the  subject,  I  arrive  at  the  conclusion  that  so 
long  as  the  national  currency  is  required  for  legitimate  business  purposes, 
it  will  not  largely  accumulate  in  the  banks  of  either  of  the  three  cities  of 
New  York,  Boston  or  Philadelphia,  nor  will  it  be  sent  home  for  redemp 
tion.  Thus  far  it  does  not  appear  that  there  has  been  a  plethora  or  glut  of 
national  currency  in  either  of  those  cities.  But  suppose  that  in  the  course 
of  a  few  mouths  there  should  accumulate  a  few  millions  dollars  of  national 
currency  in  those  banks  more  than  could  be  readily  disposed  of  in  the 
operations  of  the  Government  and  the  people,  in  what  manner  should  it 
be  disposed  of? 

In  such  a  contingency,  when  it  does  occur,  I  think  the  issuing  banks 
should  be  called  upon  to  redeem  their  circulating  notes,  and  it  seems  to 
me  to  be  right  that  each  bank  should  be  required  by  law  to  redeem  in 
the  principal  city  where  such  surplus  currency  accumulates,  as  well  as  at 
their  own  counter. 

New  York  city  is  the  great  commercial  emporium,  and  is  clearly  indica 
ted  by  the  course  of  business,  foreign  and  domestic,  as  the  proper  place 
for  each  bank  located  out  of  that  city,  to  have  an  agent  for  the  redemption 
of  its  circulating  notes. 

An  amendment  to  the  national  banking  law  can  probably  be  made  at 
the  next  session  of  Congress,  which  shall  require  all  the  banks  to  have  an 
agent  for  the  redemption  of  their  circulating  notes  in  the  city  of  New 
York,  instead  of  being  allowed  to  select  as  they  now  do,  any  one  of  the 
seventeen  cities  named  in  the  present  law.  This  being  accomplished,  any 
bank  or  individual  in  New  York,  or  elsewhere,  in  any  city  or  town  in  the 
United  States,  could  send  the  circulating  notes  of  any  bank  to  the  agency 
selected  by  it  for  redemption  without  the  expense  and  risk  of  an  assorting 
house,  which  I  think  is  the  true  mode  of  providing  for  the  redemption  of 
the  national  currency.  This  would  be  in  accordance  with  the  law,  and 
Avould,  I  think,  give  better  satisfaction  and  better  promote  the  welfare  of 
all  concerned. 

This  is  my  answer  to  your  request. 

Yours  truly,  E.  G  SPAULDING. 

J.  U.  ORVIS,  Esq., 

Pres't  9th  National  Bank,  New  York." 

MR.   RANDALL'S  BILL  TO  DESTROY  NATIONAL  BANKS. 

BUFFALO,  January  22,  1867. 
Hon.  H.  R.  Hulburd,  Comptroller  of  Currency,  Washington; 

Dear  Sir — I  am  much  obliged  for  the  information  contained  in  your 
letter,  and  I  trust  you  will  pardon  me  for  the  remarks  I  am  about  to 
make. 

I  have  watched  with  a  good  deal  of  interest  the  various  plans  brought 
forward  in  Congress,  in  relation  to  the  National  Finances  and  Amend 
ments  to  the  National  Banking  Law.  Every  man  in  the  country  is  on 
the  lookout  to  see  what  is  to  come  next.  Every  one  engaged  in  legitimate 
pursuits  wants  a  fixed  policy  and  steadiness  in  financial  affairs,  and  yet 


14 

all  are  under  constant  apprehensions,  fearing  that  some  scheme  will  be 
hastily  passed  Iby  Congress  which  will  derange  monetary  affairs,  and  upset 
all  their  business  calculations.  Many  enterprises  are  postponed.  The 
building  of  railroads,  ships,  warehouses,  elevators,  furnaces,  and  other 
manufacturing  establishments,  are  held  in  abeyance  until  it  can  be  more 
clearly  seen  what  is  to  be  done  with  these  schemes,  and  what  is  to  be  the 
future  in  regard  to  financial  affairs. 

It  is  obvious  that  this  suspense  and  apprehension  operates  very  unfavor 
ably  upon  individuals,  as  well  as  upon  the  revenues  of  the  Government. 
Congress  in  its  official  capacity  has  thus  far  acted  wisely.  It  has  not 
passed  any  of  the  individual  schemes  that  have  been  brought  forward. 
It  has  been  content  to  'let  well  enough  alone.'  It  has  refused  to  increase 
the  national  currency  above  $300,000,000.  It  has  not  passed  Mr.  Randall's 
grand  scheme  of  repudiating  the  faith  of  the  Government  with  the 
National  Banks,  and  turning  the  Treasury  Department,  in  time  of  peace, 
into  a  permanent  machine,  for  the  issue  of  an  irredeemable  paper  cur 
rency  when  there  is  not  the  least  necessity  for  it,  and  when  all  history 
proves  it  to  be  unwise,  as  tending  to  retard  the  resumption  of  specie  pay 
ments,  and  resulting  in  general  financial  disaster,  bankruptcy  and  ruin, 
both  to  the  Government  and  people.  It  has  refused  to  pass  the  twenty 
pages  of  pending  amendments  to  the  National  Bank  act,  (House  Bill  Xo. 
771,)  which,  if  passed,  would  make  the  law  worse  instead  of  better.  In 
short,  the  Senate  and  House,  as  legislative  bodies,  have  submitted  to  the 
introduction  of  these  injudicious  measures  to  be  talked  about,  but  as  yet 
they  have  not  been  unwise  enough  to  let  any  of  them  be  passed  into  laws 
to  further  disturb  existing  arrangements  under  laws  already  passed,  and 
which,  up  to  the  time  of  the  meeting  of  Congress,  were  operating  very 
favorably,  under  a  moderate  contraction  of  the  currency,  in  preserving  a 
good  degree  of  steadiness  and  uniformity  in  the  money  market,  keeping 
business  steady  and  prosperous,  and  enabling  the  Secretary  of  the  Treas 
ury  to  establish  more  certainly  the  public  credit  at  home  and  abroad,  and 
make  a  most  favorable  exhibit  of  the  national  debt.  These  are  matters 
of  great  consequence  to  the  welfare  of  the  nation,  and  I  sincerely  hope 
that  no  hasty  or  indiscreet  measures  will  be  allowed  to  pass.  The  people 
of  the  country  need  rest,  and  in  order  to  secure  it  I  trust  that  Congress 
will  hold  a  steady  purpose,  and  not  pass  laws  at  one  session  to  be  repealed 
in  the  next.  We  are  cursed  with  too  much  legislation,  and  I  am  gratified 
to  see  the  present  Congress  holding  back  on  all  impracticable  schemes. 

The  act  of  Congress  passed  on  the  12th  of  April  last,  it  seems  to  me  is  a 
wise  and  judicious  measure.  It  authorizes  the  Secretary  of  the  Treasury 
to  dispose  of  5-20  gold  bonds,  and  with  the  proceeds  to  retire  six  per  cent, 
compound  interest  notes,  and  the  plain  legal  tender  greenback  currency 
and  other  indebtedness  of  the  Government,  but  not  to  retire  more  than 
$4,000,000  of  greenbacks  a  month,  or  $48.000,000  a  year,  but  without 
restriction  as  to  the  amount  of  compound  sixes  that  may  be  retired  during 
any  week  or  month.  This  law  is  discretionary  with  the  Secretary  of  the 
Treasury.  Power  is  given  him  to  contract  the  currency,  but  he  will  no 
doubt  use  his  discretionary  power  prudently,  and  not  retire  either  green 
backs  or  compounds,  any  faster  than  it  can  be  done  without  materially 
disturbing  the  legitimate  business  of  the  country.  His  object  will  be  in 
the  future,  as  it  has  been  during  the  past  year,  to  keep  a  steady  and  uni 
form  money  market.  This  will  be  a  necessity  on  his  part  to  enable  him 
to  successfully  carry  on  the  fiscal  affairs  of  the  Government.  Under  a 


15 

i\ -^  -    ^jj 

very  s  tringent  and  paniky  money  market,  the  5-20  bonds  would  fall  below 
par,  thereby  stopping  conversion  of  7-30  into  the  5-20  bonds,  and[  tfes.  in 
view  of  $650,000,000  of  7-30s  falling  due  between  this  and  July  -»*^r3*c 
would  embarrass  and  derange  all  the  operations  of  the  Treasury 
ment.  The  Secretary  of  the  Treasury  must  therefore,  of  necessity 
moderate  and  discreet  in  contracting  the  currency  under  the  law  of  tl 
12th  of  April. 

The  Secretary  will  no  doubt,  by  a  moderate  and  prudent  course  of  con 
traction,  endeavor  to  keep  the  business  and  industry  of  the  nation  in  a 
prosperous  condition,  in  some  degree  check  wild  speculation,  gradually 
reduce  prices,  and  bring  greenbacks  and  national  currency  nearer  the 
specie  standard.  On  this  point  the  Secretary,  in  his  last  annual  report, 
makes  the  following  judicious  remarks :  *  How  rapidly  the  United  States 
notes  may  be  retired  must  depend  upon  the  effect  which  contraction  may 
have  upon  business  and  industry,  and  can  be  better  determined  as  the 
work  progresses.  No  determinate  scale  of  reduction  would,  in  the  pres 
ent  condition  of  affairs,  be  advisable.  The  policy  of  contracting  the 
circulation  of  Government  notes  should  be  definitely  and  unchangeably 
established,  and  the  process  should  go  on  just  as  rapidly  as  possible  with 
out  producing  a  financial  crisis,  or  seriously  embarrassing  those  branches 
of  industry  and  trade,  upon  which  our  revenues  are  dependent.'  As 
the  volume  of  currency  is  reduced,  it  will  increase  in  value,  and  as  soon 
as  the  specie  standard  is  reached,  the  national  banks  will  be  obliged  to 
redeem  their  circulating  notes  in  specie.  The  Government  can  retire 
whenever  it  seems  best,  from  the  field,  as  an  issuer  of  paper  currency, 
and  consequently  will  not  be  under  the  necessity  of  providing  gold  and 
silver  to  redeem  it.  The  burthen  of  redeeming  the  national  currency  in 
gold  and  silver  will  then  be  thrown  exclusively  upon  the  banks  that  issue 
it,  and  they  will  be  required  to  keep  the  necessary  reserves  of  coin  for 
that  purpose. 

It  seems  to  me  that  the  act  of  the  12th  of  April  contains  all  the  power 
for  contracting  the  currency  which  is  necessary  to  bring  the  business  of 
the  country  back  to  the  specie  standard,  as  it  was  before  the  rebellion. 
It  may  take  three  years,  five  years,  or  even  ten  years,  to  accomplish  that 
result.  When  the  old  uniform  standard  of  gold  and  silver  is  reached,  and 
prices  and  the  business  of  the  country  are  again  based  thereon,  national 
banks  will  take  the  place  of  State  banks  in  the  issue,  circulation  and 
redemption  of  the  currency  necessary  to  carry  on  the  fiscal  affairs  of  the 
Government  and  people.  The  Treasury  Department  will  be  relieved  from 
a  duty  that  was  forced  upon  it  as  an  imperative  necessity  during  the  war, 
and  the  Government  left  to  perform  its  legitimate  functions  under  the 
Constitution,  the  currency  being  thereafter  regulated  by  the  wants  of 
trade  and  industrial  pursuits. 

It  was  never  intended  by  the  originators  of  the  legal  tender  acts  that 
the  issue  of  an  irredeemable  paper  currency  should  ever  become  the  per 
manent  policy  of  the  Government.  In  the  opening  speech  I  made  in  the 
House  on  the  28th  of  January,  1862,  on  the  bill  introduced  by  me,  I  said 
that  'the  bill  before  us  is  a  war  measure;  a  measure  of  necessity  and  not 
of  choice,  presented  by  the  Committee  of  Ways  and  Means,  to  meet  the 
most  pressing  demands  upon  the  Treasury,  to  sustain  the  army  and  navy, 
until  they  can  make  a  vigorous  advance  upon  the  traitors  and  crush  out 
the  rebellion.  These  are  extraordinary  times,  and  extraordinary  meas 
ures  must  be  resorted  to,  in  order  to  save  our  Government  and  preserve 
our  nationality." 


16 

The  credit  of  the  Government,  by  the  legal  tender  act,  was  brought  into 
immediate  requisition,  and  in  the  most  available  form  to  provide  ways 
and  means  for  sustaining  the  army  and  navy  to  crush  the  rebellion.  It 
was  in  effect  a  forced  loan  from  the  people  to  the  Government,  in  a  most 
perilous  period  in  our  history,  and  was  justified  mainly  on  the  ground  of 
imperative  necessity.  It  was  a  temporary  measure  passed  in  a  most 
pressing  exigency,  and  should  not  be  continued  any  longer  after  peace  is 
restored  than  seems  to  be  necessary  to  conduct  us  safely  back  to  that 
standard  of  value,  which  is  recognized  by  all  the  nations  of  the  world. 

In  the  speech  to  which  I  have  above  referred,  I  further  said,  '  a  suspen 
sion  of  specie  payments  is  greatly  to  be  deplored,  but  it  is  not  a  fatal  step 
in  an  exigency  like  the  present.' 

1  The  British  Government  and  the  bank  of  England  remained  under  sus 
pension  of  specie  payments  from  1797  to  1821-2,  a  period  of  twenty-five 
years ; — gold  is  not  as  valuable  as  are  the  productions  of  the  farmer  and 
mechanic,  for  it  is  not  as  indispensable  as  are  food  and  raiment.  Our 
army  and  navy  must  have  what  is  more  valuable  to  them  than  gold  or 
silver,  they  must  have  food,  clothing  and  the  material  of  war.  Treasury 
notes  issued  by  the  Government  on  the  faith  of  the  whole  people,  will 
purchase  these  indispensable  articles,  and  the  war  can  be  prosecuted  until 
we  can  enforce  obedience  to  the  Constitution  and  laws  and  an  honorable 
peace  be  thereby  secured.  This  being  accomplished,  I  will  be  among  the 
first  to  advocate  a  speedy  return  to  specie  payments,  and  all  measures  that 
are  calculated  to  preserve  the  honor  and  dignity  of  the  Government  in 
time  of  peace,  and  which  I  regret  are  not  practicable  in  the  prosecution  of 
this  war.' 

The  national  banking  law,  passed  to  continue  for  twenty  years,  was 
intended  as  a  permanent  system.  It  was  intended  that  it  should  take  the 
place  of  the  State  banks,  in  furnishing  a  solvent  national  currency  ot 
uniform  similitude  and  value  for  the  whole  country.  The  arguments  put 
forth  in  the  last  annual  reports  of  yourself  and  the  Secretary  of  the  Treas 
ury  in  favor  of  sustaining  the  national  bank  currency  seem  to  me  to  be 
cogent  and  conclusive.  I  advocated  the  national  bank  law,  not  for  any 
immediate  relief  it  would  give  to  the  Treasury,  but  as  a  permanent  system 
of  currency  and  banking.  In  the  remarks  which  I  made  in  the  House  on 
the  day  of  the  passage  of  the  bill,  I  said  'that  I  should  vote  for  it,  not  that 
I  think  it  will  afford  any  considerable  relief  to  the  Treasury  in  the  next 
two  or  three  years,  but  because  I  regard  it  as  the  commencement  of  a  per 
manent  system  for  providing  a  national  currency  that  will,  if  wisely 
administered,  be  of  great  benefit  to  the  people,  and  a  reliable  support  to 
the  Government  in  the  future.' 

All  the  advocates  of  the  legal  tender  act  \vhile  it  was  pending  in  Con 
gress,  based  their  arguments  upon  the  necessity  of  its  passage  as  a  tempo 
rary  relief  to  the  Treasury  during  the  war,  and  not  as  a  permanent  policy 
of  the  Government.  On  the  contrary,  the  national  banking  law  was 
advocated  as  a  permanent  system  of  national  currency  and  banking  for 
the  whole  country.  The  State  banks  in  this  and  other  States,  especially 
the  banks  in  the  State  of  New  York,  gave  up  their  State  organizations 
with  great  reluctance.  But  in  consequence  of  the  law  which  taxed  State 
circulation  out  of  existence,  the  State  banks  were  obliged  to  come  under 
the  national  banking  law  for  self-preservation,  a  law  which  on  its  face  was 
to  continue  for  twenty  years. 

It  has  taken  something  over  three  years  to  put  in  successful  operation 


IT 

about  1,650  national  banks  under  one  system,  and  which  are  directly  under 
the  control  and  regulation  of  the  officers  of  the  Government  at  Washing 
ton.  A  few  of  the  banks  have  but  recently  perfected  their  organizations 
and  obtained  from  the  Department  their  circulating  notes.  Before  the  ink 
is  fairly  dry  on  the  last  issue  of  national  currency  we  are  startled  with  a 
bill  reported  from  the  bank  committee  in  the  House  to  emasculate  and 
destroy  this  system  of  national  banking.  I  say  destroy  it,  for  no  man  at 
all  conversant  with  the  advantages  of  private  banking  and  its  freedom 
from  taxation  and  other  restrictions,  would  consider  it  any  inducement  to 
remain  under  the  inquisitorial  supervision  imposed  by  the  national  bank 
ing  law,  if  the  right  to  issue  circulating  notes  is  taken  away  from  them. 
These  banks  have  been  organized  in  good  faith  by  the  stockholders  under 
the  national  law,  because  in  the  first  place  State  bank  circulation  was 
killed  by  United  States  taxation,  and  in  the  next  place  great  inducements 
were  held  out  to  them  for  a  national  circulation  to  continue  twenty  years. 
What  a  breach  of  faith  on  the  part  of  the  Government  in  holding  out 
inducements  to  organize  under  this  law,  killing  off  the  State  banks  first, 
and  then  turning  a  short  corner  to  kill  off  the  national  banks,  children  of 
its  own  creation.  Are  all  the  rights  which  the  stockholders  of  the  banks 
have  acquired  under  this  law  to  be  thus  summarily  disposed  of?  How 
many  banks  would  have  organized  under  this  law  if  the  stockholders  had 
supposed  that  their  rights  to  issue  circulating  notes  would  be  taken  away 
from  them  as  soon  as  they  were  organized  ?  iN"ot  one  in  a  hundred,  for  the 
simple  reason  that  there  would  be  no  inducement  to  come  under  the 
restraints  of  the  national  law  without  circulation. 

It  is  said  that  these  banks  can  continue  to  do  business  on  their  capital 
and  deposits,  this  is  no  doubt  true,  but  it  could  be  much  better  carried  on 
by  the  stockholders  as  private  bankers  without  the  onerous  taxation  and 
restrictions  imposed  by  the  national  law.  The  organization  of  State  and 
private  banks  would  be  much  better,  larger  latitude  being  given  to  oper 
ate,  and  much  freer  from  inquisitorial  examinations. 

If  this  bill  now  pending  in  the  House  is  passed  and  becomes  a  law,  it 
will  pretty  effectually  use  up  the  national  banking  system.  It  has  taken 
about  four  years  to  build  it  up,  and  within  three  years  it  will  be  so  far 
destroyed  as  to  make  it  no  object  for  stockholders  that  can  organize  into 
private  banking  companies  to  remain  in  the  emasculated  and  restricted 
condition  in  which  they  will  be  placed. 

What  security  can  men  have  for  investing  their  money  and  basing  their 
business  calculations  under  a  national  law  ?  The  insecurity  and  scandal 
that  will  attach  to  such  hasty  and  inconsiderate  legislation  w^ill  deter  all 
prudent  men  from  placing  too  much  reliance  upon  a  law  of  Congress, 
passed  at  one  session,  organizing  a  great  system  of  national  policy,  to  be 
emasculated  or  repealed  before  it  gets  fairly  into  operation.  It  looks  too 
much  like  confiscating  the  property  of  individuals  under  the  pretence  of 
creating  a  sinking  fund  to  pay  off  the  national  debt. 

I  hope  the  Senate  and  House  will  carefully  consider  this  measure  in  all 
its  bearings  before  they  pass  a  law  involving  such  important  consequences 
in  regard  to  its  breach  of  faith  in  destroying  the  acquired  rights  of  the 
stockholders  in  these  banks,  and  the  disastrous  consequences  likely  to 
follow  the  issue  of  Government  paper  money  as  a  permanent  policy. 
Yours  very  truly, 

E.  G.  SPAULDI:NTG. 


18 

MR.     SPAULDING   TO    SECRETARY    MCCULLOCH. 

FARMER'S  AND  MECHANICS'  NATIONAL  BANK,     ) 

No.  3  Spaulding's  Exchange,  > 

BUFFALO,  December  4, 186G.        ) 

Dear  Sir — You  will  do  me  a  favor  by  sending  to  me  by  mail  a  pamphlet 
copy  of  your  report  and  accompanying  documents.  I  have  only  seen  a 
synopsis  of  it,  but  it  seems  to  me  that  you  understand  the  situation,  and 
have  stated  it  with  force  and  ability.  I  congratulate  you  on  the  favorable 
exhibit  of  the  public  debt,  which  is  in  a  great  measure  due  to  your  dis 
creet  and  prudent  management  of  the  national  finances.  You  have  no 
doubt  now,  to  a  large  extent,  control  of  the  finances  of  the  country,  and 
T  think  that  you  will,  of  necessity,  contract  moderately,  so  as  to  preserve 
a  tolerably  easy  money  market,  in  order  to  be  able  to  fund  the  compound 
6's  and  the  7-30's  into  long  gold-bearing  bonds,  between  this  and  the  15th 
of  July,  1868.  There  may  be  occasional  spasms  and  tightness  for  money 
with  the  speculators,  but  generally  I  shall  look  for  plenty  of  money  for 
legitimate  business  for  at  least  a  year  to  come.  If  the  speculators  should 
get  some  check  it  would  be  a  good  thing  for  the  country,  and  all  men 
engaged  in  industrial  pursuits  would  not  complain. 

I  hope  you  will  be  able  to  reach  the  specie  standard  with  at  least  $250,- 
000,000  of  plain  legal  tender  United  States  notes  still  outstanding.  The 
amount  of  gold  and  silver  coin  now  available  in  this  country  is  so  small 
that  it  constitutes  a  very  adequate  basis  on  which  to  rest  the  largely 
increasing  volume  of  business  to  be  transacted,  and  unless  we  can  have 
legal  tender  in  some  form,  other  than  gold  or  silver  coin,  I  think  we  will 
hereafter  be  very  much  subjected  to  panics  and  revulsions,  to  the  injury 
of  legitimate  business,  and,  consequently,  diminished  revenues.  If  we 
can  maintain  $250,000,000  of  the  paper  tender  at  the  specie  standard,  in 
addition  to  the  supply  of  gold  and  silver,  I  think  the  business  of  the  coun 
try  would,  in  the  future,  be  more  steady  and  uniform. 
Yours  truly, 

E.  G.  SPAULDING. 

Hon.  HUGH  MCCULLOCH, 

Secretary  of  the  TreasurjT. 

SECRETARY    McCULLOCfl's    REPLY. 

TREASURY  DEPARTMENT,     ) 
WASHINGTON,  December  7,  1866.  $ 

Dear  Sir— Your  favor  of  the  4th  inst.  is  received.  You  will  receive  a 
copy  of  my  report  through  the  Comptroller  of  the  Currency.  It  was  very 
hastily  written,  but  is,  I  think,  sound  in  doctrine. 

What  we  need  is  an  increase  of  labor.  If  we  could  have  the  productive 
industry  of  the  country  in  full  exercise,  we  could  return  to  specie  pay 
ments  without  any  very  large  curtailment  of  United  States  notes.  My 
object  has  been  to  keep  the  market  steady,  and  to  work  back  to  specie 
payments  without  a  financial  collapse.  I  shall  act  in  the  future  as  I  have 
in  the  past,  with  great  caution,  and  attempt  no  impracticable  thing. 
I  am  very  trulv  yours. 

H.  MCCULLOCH. 

Hon.  E.  G.  SPAULDING, 

Farmer's  and  Mechanics'  Bank,  Buffalo,  N.  Y. 


19 

NATIONAL   DEBT NO    REPUDIATION. 

Will  the  public  debt  of  the  United  States  ever  be  repudiated?  The 
answer  to  this  question  depends  upon  the  efficiency  and  fidelity  of  the 
national  Government.  The  Government  has  ample  power  under  the  Con 
stitution  and  ample  means  at  its  disposal  to  pay  every  dollar  of  the  public 
debt.  Believing  that  the  Government  will  continue  faithful  and  efficient, 
I  answer  no !  the  public  debt  will  not  be  repudiated.  A  large  majority  of 
the  people  also  say  no,  but  nevertheless  there  is  a  small  minority  that  have 
answered  this  question  in  the  affirmative,  and  continue  to  repeat  the  asser 
tion  that  the  public  debt  will  never  be  paid.  This  reckless  assertion  has 
some  influence  in  depressing  the  national  securities  and  keeping  up  the 
price  of  gold.  This  grumbling  class  of  people  say  that  the  "old  Continen 
tal  money"  issued  during  the  war  for  independence,  became  worthless 
and  was  never  paid.  This  is  no  doubt  true — the  Continental  money  did 
greatly  depreciate  and  was  never  fully  paid,  but  it  was  issued  under  the 
feeble  authority  of  the  old  Continental  Congress,  when  there  was  no 
adequate  executive  authority  to  enforce  the  collection  of  taxes  for  the  pay 
ment  of  the  public  debt.  This  depreciated  currency  was  issued  both 
before  and  after  the  adoption  of  the  articles  of  Confederation  of  the  old 
thirteen  states,  and  before  the  formation  of  the  present  efficient  Govern 
ment  under  the  new  Constitution. 

Under  the  articles  which  composed  the  old  compact,  there  was  no  power 
vested  in  the  Continental  Congress  to  collect  taxes.  The  power  to  enforce 
the  collection  of  taxes  was  left  to  the  legislatures  of  the  several  States. 
Upon  a  quota  furnished  and  a  requisition  made  by  Congress,  the  several 
States  were  required  to  levy  and  collect  taxes  to  support  the  Federal  Com 
pact.  This  plan  was  a  fallacious  system  of  quotas  and  requisitions,  incon 
sistent  with  every  idea  of  vigor  or  efficiency  which  pertains  to  every  well 
organized  Constitution  of  civil  Government.  It  is  not  at  all  surprising 
that  the  Continental  money  which  depended  upon  thirteen  other  Govern 
ments  to  levy  and  collect  taxes  to  raise  money  for  its  payment,  should 
depreciate  and  become  of  little  or  no  value.  The  power  contained  in  the 
old  Continental  Compact  was  nominal,  without  a  president  or  other  exec 
utive  to  enforce  its  requisitions.  It  was  ineffectual  to  raise  money  by 
taxation,  and  consequently  the  old  Continental  money  fell  into  disrepute 
and  was  never  fully  paid. 

Under  the  present  Constitution  all  is  changed.  Instead  of  the  old  feeble 
compact  existing  at  the  close  of  the  seven  years  war  for  independence,  we 
have  now  a  strong,  well  organized  civil  Government,  under  a  Constitution 
with  ample  executive  legislation  and  judicial  powers,  fully  adequate  to 
the  objects  for  which  it  was  formed.  This  Government  is  now  invested 
with  power  to  protect  and  defend  the  Constitution,  enforce  the  laws  and 
preserve  its  own  existence ;  power  to  provide  for  the  common  defence  and 
promote  the  general  welfare ;  and  for  these  purposes  has  power  to  raise 
and  support  armies,  to  provide  and  maintain  a  navy,  and  provide  for  call 
ing  forth  the  militia  to  execute  the  laws  of  the  Union,  suppress  insurrec 
tions  and  repel  invasions.  To  raise  the  money  for  these  purposes,  the 
Government  is  invested  with  further  power  to  borrow  money  on  the 
credit  of  the  United  States,  and  to  repay  the  money  thus  borrowed,  to 
levy  and  collect  uniform  taxes,  duties,  imports,  and  excises  throughout 
the  United  States.  These  are  some  of  the  great  powers  intrusted  to  the 
general  Government  for  the  preservation  of  its  own  existence. 

When  this  most  wicked  and  gigantic  rebellion  broke  out,  in  an  open  and 


20 

avowed  determination  to  break  up  the  Union,  it  became  necessary  to  bring 
into  active  exercise  all  these  high  powers  of  the  Government.  Armies  and 
navies  had  to  be  raised  and  supported.  All  the  material  of  war  necessary 
for  their  efficiency  had  to  be  provided.  Money  had  to  be  borrowed,  and 
in  vast  amounts.  The  old  Continental  money  possessed  none  of  the 
elements  of  vitality  and  credit  that  is  imparted  to  the  legal  tender  demand 
notes  and  bonds  issued  under  the  present  Constitution,  with  this  great 
power  vested  in  the  President  to  enforce  the  laws. 

The  debt  thus  incurred  in  the  prosecution  of  the  war  to  put  down  the 
rebellion  and  restore  the  national  authority  over  all  the  States,  will  be 
about  $3,000,000,000.  This  large  sum  has  been  borrowed  on  the  credit  of 
the  United  States,  to  maintain  the  Government  and  perpetuate  the  Union, 
and  the  beneficial  results  flowing  from  the  triumph  of  the  national  cause 
are  amply  sufficient  to  compensate  for  all  the  money  expended  in  accom 
plishing  this  great  achievement.  The  secureties  issued  as  evidence  of  this 
large  indebtedness,  consist  of  bonds,  notes  and  certificates,  which  are 
widely  distributed  among  all  classes  of  people. 

All  the  forms  of  law  have  been  complied  with  to  bind  the  Government 
and  give  validity  to  these  different  forms  of  indebtedness.  The  good  faith 
of  the  nation  is  pledged  in  the  most  solemn  manner  to  the  payment  of 
every  dollar  of  this  debt,  both  principal  and  interest. 

The  Government  of  the  United  States  is  not  now  dependent  at  all  on 
the  State  Governments  for  the  execution  of  its  great  powers.  All  the 
powers  conferred  on  the  General  Government  by  the  present  Constitution 
are  self-acting,  self-sustaining,  and  wholly  independent  of  State  author 
ity.  The  Constitution  and  laws  of  the  United  States  operate  directly 
upon  the  people,  without  any  regard  to  State  boundaries.  We  have  now 
a  Congress  to  pass  all  the  tariff  and  tax  laws  necessary  to  raise  all  the 
money  required  to  pay  the  current  annual  expenses  of  the  Government, 
pay  the  interest  on  the  public  debt,  and  raise  a  surplus  sufficient  to  retire 
annually  a  portion  of  the  principal. 

The  grand  results  of  the  last  four  years  have  most  abundantly  shown 
the  power  and  efficiency  of  the  present  National  Government  under  the 
existing  Constitution. 

It  is  clearly  demonstrated  that  Ave  have  a  strong,  stable  and  efficient 
Government,  fully  competent  to  levy  and  enforce  the  collection  of  cus 
tom  duties  and  internal  revenue  adequate  to  support  the  Government. 

The  true  value  of  the  property,  real  and  personal,  within  the  United 
States,  according  to  the  census  of  1860,  was  $16,000,000,000,  and  it  has, 
notwithstanding  the  exhausting  nature  of  the  war,  greatly  increased 
since  that  time.  All  this  property  is  liable  to  be  taxed  to  the  full  extent 
necessary,  to  support  the  Government  and  pay  every  dollar  of  the  debt 
incurred  in  the  prosecution  of  the  war.  The  Government  has  a  claim 
under  the  Constitution,  a  mortgage  in  fact,  which  is  the  first  lien  on  all 
this  real  and  personal  property  to  that  extent.  All  the  debts  of  States, 
counties,  cities,  corporations  and  individuals  are  second  and  subordinate 
to  this  first  claim  of  the  National  Government. 

Our  credit  rests  on  this  property  and  the  good  faith  and  fidelity  of  the 
Government  to  collect  these  taxes. 

Since  the  creation  and  distribution  of  this  large  debt  among  all  classes 
of  people,  and  a  large  part  of  it  made  the  basis  for  the  organization  of  over 
sixteen  hundred  banks,  the  whole  fabric  of  credit,  public  and  private, 
must,  to  a  great  extent,  rest  on  the  efficiency  and  determination  with 


21 

which  these  taxes  are  to  be  levied  and  collected.  Public  and  private 
credit  are  so  interwoven  with  all  the  commercial  transactions  of  the  coun 
try,  that  if  the  public  credit  fails,  individual  credit  must  also  fail.  The 
value  of  legal  tender  notes,  national  currency,  five-twenty  bonds,  ten- 
forties  and  seven-thirties,  all  depend  upon  the  revenues  derived  from 
custom  duties  and  internal  taxes.  Our  own  people  and  the  people  of 
Europe  must  be  fully  assured,  not  only  of  the  ability,  but  of  the  willing 
ness  and  determination  of  the  Government  to  pay  promptly  every  one  of 
the  obligations  of  the  Government  as  they  become  due,  and  that  the  finan 
cial  credit  of  the  Government  will  be  maintained  on  the  stable  and  sure 
basis  of  ample  taxation.  There  is  no  other  sure  basis  for  it  to  rest  upon. 

There  can  be  no  doubt  that  the  suggestions  of  the  Secretary  of  the  Treas 
ury  to  gradually  retire  a  portion  of  the  currency,  are  wise  and  judicious. 
If  it  cannot  be  done  by  funding  without  bringing  down  the  price  of  five- 
twenty  six  per  cent,  bonds  below  par,  so  as  thereby  to  embarass  the 
operations  of  the  Treasury  in  providing  for  the  large  temporary  debt  as  it 
becomes  due,  then  I  think  it  should  be  accomplished  by  Congress  provi 
ding  for  an  increase  of  revenue.  The  credit  of  the  Government  can  be 
maintained,  and  it  ought  to  be  maintained  at  all  hazards,  and  prices  should 
be  reduced.  All  who  have  read  the  late  admirable  reports  of  the  Secretary 
of  the  Treasury,  the  Comptroller  of  the  Currency,  and  the  nearly  unani 
mous  resolution  of  the  House  of  Eepresentatives,  must  be  satisfied  that  the 
Government  is  united  and  strong  in  its  determination  to  enforce  the  full 
power  it  possesses  to  carry  us  safely  through  all  our  financial  difficulties, 
and  bring  the  business  of  the  country  back  to  a  more  safe  and  secure 
standard.  So  long  as  Congress  and  the  Executive  departments  of  the 
Government  continue,  as  they  now  do,  to  discharge  their  duties  with 
efficiency  and  fidelity,  the  repudiation  of  the  public  debt  will  be  an 
impossibility. 

I  have  lately  seen  and  read  in  the  public  newspapers  much  that  is  of  a 
fault-finding  character,  and  much  theorizing  on  the  subject  of  our  national 
finances,  but  after  all  that  has  been  said  or  written  on  the  subject,  it  comes 
down  to  a  plain  matter-of-fact  business,  which  seems  to  be  well  under 
stood  by  the  Secretary  of  the  Treasury,  viz: 

1.  That  frugality  and  economy  should  be  practiced  in  all  the  depart 
ments  of  the  public  service. 

2.  Find  out  all  the  taxable  property  and  business  of  the  country,  and 
the  best  modes  of  collecting  revenue  therefrom. 

3.  Levy  and  collect  a  tax  upon  it  amply  sufficient  to  raise  a  sum  that 
will  pay  the  yearly  expenses  of  the  Government,  pay  the  interest  on  all 
the  public  debt,  and  leave  a  surplus  of  at  least  $50,000,000   annually 
towards  retiring  a  part  of  the  public  debt,  and  the  credit  of  the  Govern 
ment  will  be  firmly  maintained.    Xo  repudiation  of  the  public  debt  will 
ever  take  place  so  long  as  this  policy  is  pursued  with  vigor  on  the  part  of 
the  national  Government. 

The  great  mass  of  the  people  are  honest  and  patriotic,  and  believe  that 
the  public  debt  was  incurred  for  just  and  patriotic  purposes.  They  will 
stand  by  their  rulers  in  maintaining  the  public  faith.  They  will  pay  the 
taxes  freely,  and  will  never  consent  that  the  fair  fame  of  their  free  Gov 
ernment  shall  ever  be  tarnished  by  a  repudiation  of  one  dollar  of  the  debt 
incurred  in  such  a  righteous  and  noble  cause. 

E.  G.  SPAULDING. 


22 

NO    STATE    TAXATION    OP    UNITED    STATES    BONDS. 

The  Supreme  Court  of  the  United  States,  at  Washington,  has  decided 
that  United  States  Government  Bonds  and  Treasury  !N"otes  cannot  be 
taxed  by  States,  Counties  or  Cities.  The  power  to  borrow  money  by  the 
Government  of  the  United  States  is  supreme,  and  cannot  be  interfered 
with  by  any  State  law.  All  the  Government  securities  have  been  issued 
under  a  positive  law,  which  makes  it  a  part  of  the  contract  that  they 
should  not  be  taxed  for  local  purposes,  and  the  contract  cannot  be  changed. 
The  first  section  of  the  act  of  Congress,  passed  June  30, 1864,  provides  that 
'all  bonds,  Treasury  notes  and  other  obligations  of  the  United  States  shall 
be  exempt  from  taxation  by  or  under  State  or  Municipal  authority.' 

The  Constitution  of  the  United  States  provides  that  '  This  Constitution 
and  the  Laws  of  the  United  States,  which  shall  be  made  in  pursuance 
thereof,  shall  be  the  supreme  law  of  the  land,  and  the  judges  in  every  State 
shall  be  bound  thereby ;  anything  in  the  Constitution  or  laws  of  any  State 
to  the  contrary,  notwithstanding.' 

The  Supreme  Court  of  the  United  States  has  decided  that  all  the  State 
laws  passed  to  tax  United  States  securities  are  unconstitutional  and  void. 

These  loans  are  the  best  security  in  the  market.  Xo  searches  of  title 
are  necessary.  The  Constitution  of  the  United  States  and  the  act  of  Con 
gress  make  the  public  debt  the  first  lien  on  the  real  and  personal  property 
of  the  country.  The  Government  bonds  and  notes  are  the  first  claim  to  be 
paid,  city  bonds,  railroad  bonds  and  bonds  and  mortgages,  are  only  a 
second  lien,  to  be  paid  after  the  Government  securities  are  paid. 

E.  G.  SPAULDING. 

PUBLIC     DEBT GOOD      FAITH — -HON.      E.      G.      SPAL'LDING's     LETTER     TO 


BUFFALO,  Dec.  24,  1867. 
Hon.  E.  D.  Morgan,  U.  S.  Senator,   Washington. 

Dear  Sir — I  am  in  receipt  of  the  recent  report  of  the  Finance  Committee 
brought  in  by  Senator  Sherman,  and  Senate  Bill  Xo.  207,  'for  funding  the 
national  debt,  and  for  the  conversion  of  the  notes  of  the  United  States,' 
accompanied  by  your  letter  of  the  19th  instant,  asking  my  opinion  on  the 
proposed  measure,  or  any  of  its  parts,  and  desiring  me  to  communicate 
my  suggestions  at  an  early  day. 

I  am  deeply  impressed  with  the  importance  of  a  return  to  the  specie 
standard  at  the  earliest  moment  consistent  with  the  operations  of  the 
Government  and  people.  I  concur  fully  in  that  part  of  the  report  of  your 
committee  which  seeks  l  to  secure  to  the  holders  of  United  States  notes,  as 
soon  as  possible,  their  value  in  gold.'  This,  in  my  opinion,  should  engage 
the  earnest  efforts  of  Congress  and  the  Executive ;  and  I  am  much  grati 
fied  to  see  your  committee  so  earnest  and  decided  in  urging  a  return  to 
the  specie  standard  at  the  earliest  practicable  moment.  A  resumption  of 
specie  payments  by  the  Government,  the  banks  and  people,  is  the  first 
great  thing  to  be  accomplished.  This  would  dispose  of  nearly  all  the  com 
plicated  and  disturbing  issues  that  have  been  raised  by  politicians  and 
others,  as  to  the  time  when,  and  the  kind  of  money  in  which,  the  public 
debt  shall  be  paid.  It  would  demonstrate  more  clearty  than  any  thing 
else,  our  resources  and  ability  to  pay  the  public  debt,  and  our  determina 
tion  to  preserve  unimpaired  the  good  faith  of  the  nation,  and  establish  all 
business  operations  on  a  firm  and  enduring  basis. 


23 

I  notice  that  Senator  Sherman,  in  his  report,  (pages  6  and  7,)  giving 
countenance  to  the  idea  that  the  5-20  bonds,  under  the  act  of  25th  February, 
1862,  may  be  paid  in  the  depreciated  greenback  currency,  is  laboring  under 
a  material  misapprehension  of  the  facts  in  regard  to  the  representation  8 
made  by  the  agents  of  the  Government  when  the  loan  was  negotiated,  and 
especially  as  to  the  time  when  those  representations  were  made.  Mr. 
Sherman  says :  *  It  is  said  that  the  distinguished  Secretary  of  the  Treasury 
who  negotiated  the  5-20  loan,  gave  a  construction  to  this  act  at  the  time 
the  loan  was  offered ;  that  this  was  announced  to  the  people,  and  upon  the 
faith  of  this  the  loan  was  taken.  Your  committee  can  find  no  official  dec 
laration  made  by  the  Secretary  on  this  subject,  until  after  the  loan  was 
negotiated,'  and  then  refers  to  a  letter  written  by  Secretary  Chase,  May 
18,  1864,  as  being  the  first  official  declaration  on  the  subject  that  has  come 
to  his  knowledge.  The  Senator  seems  to  concede  that  if  the  Secretary 
made  official  declarations,  at  the  time  the  loan  was  negotiated,  giving  a 
construction  to  the  act,  to  the  effect  that  the  principal,  as  well  as  the 
interest,  was  payable  in  coin,  and  that  if  both  parties  understood  that  to 
be  the  construction  of  the  law,  such  declarations  would  form  a  part  of  the 
contract,  and  that  the  Government  would  be  bound  to  make  these  declara 
tions  good,  and  to  give  effect  to  the  contract  as  understood  by  both  parties 
when  it  was  made.  Now,  the  proofs  are  at  hand  that  such  official  repre 
sentations  were  made  by  the  distinguished  Secretary  of  the  Treasury, 
before  and  at  the  time  the  loan  was  being  negotiated,  as  I  will  now  pro 
ceed  to  show. 

Secretary  Chase,  who  negotiated  that  loan,  decided  as  early  as  Decem 
ber,  1862,  that  a  fair  construction  of  all  the  loan  acts  under  which  the 
funded  debt  was  contracted,  required  us  to  pay  actual  money — gold  and 
silver — on  all  the  funded  debt  of  the  Government;  that  a  pretended  pay 
ment  in  another  promise  of  the  United  States  was  no  payment,  but  merely 
changing  the  form  of  the  debt.  In  other  words,  that  a  payment  of  the 
bonds  in  greenbacks,  would  be  merely  substituting  the  debt  of  the  Gov 
ernment  in  the  form  of  legal  tender  notes  bearing  no  interest,  for  bonds 
bearing  six  per  cent,  interest,— which  would  be  manifestly  unjust.  This 
question  came  up  on  the  kind  of  money  that  should  be  provided  for  paying 
that  part  of  the  funded  debt,  created  prior  to  the  rebellion,  which  fell  due 
January  1st,  1S63,  and  this  decision  was  then  made  and  published.  The 
Committee  of  Ways  and  Means,  in  December,  1862,  a  short  time  before  its 
maturity,  desired  to  know  whether  any  further  legislation  would  be  nec 
essary  to  ensure  the  payment  of  coin  on  that  part  of  the  funded  debt 
falling  due  within  a  few  days.  In  order  to  ascertain  in  a  formal  manner 
what  construction  the  Secretary  of  the  Treasury  would  put  upon  the  law. 
a  Sub-Committee  from  the  Committee  of  Ways  and  Means  was  appointed, 
consisting  of  Mr.  Hooper,  Mr.  Morrill  and  myself,  to  confer  with  the  Sec 
retary  on  the  subject.  This  Sub-Committee  called  upon  the  Secretary  at 
the  Treasury  Department,  and  after  a  full  and  free  conference,  the  Secre 
tary  decided  that  a  fair  construction  of  the  law,  as  well  as  good  faith, 
required  him  to  pay  all  the  funded  debt  in  coin,  and  that  he  did  not  deem 
it  necessary  to  have  any  further  law  passed  to  enable  him  to  do  so. 

Under  these  circumstances,  the  Committee  of  Ways  and  Means  did  not 
deem  it  necessary  to  report  a  bill  authorizing  or  requiring  the  funded  debt 
to  be  paid  in  coin,  and  consequently  no  further  law  was  passed ;  and  on 
the  first  of  January,  1863,  the  funded  debt  falling  due  at  that  time  was 
paid  in  coin.  From  the  time  this  decision  was  made  by  Secretary  Chase, 


24: 

down  to  the  present  time,  the  same  language  has  been  held  by  each  Secre 
tary  of  the  Treasury,  namely,  that  the  funded  debt  of  the  Government 
was  payable  in  coin,  both  principal  and  interest,  and  that  the  Government 
would  not  seek  to  avail  itself  of  the  five  years  option  to  redeem  the  5-20 
bonds  until  it  was  prepared  to  pay  coin  for  the  principal  as  well  as  the 
interest.  But  this  is  not  the  only  proof. 

Messrs.  FISK  &  HATCH,  bankers  in  New  York  city,  were  prominent 
sub-agents  of  the  Government  in  negotiating  the  5-20  bonds  under  the  act 
of  February  25,  1862.  Many  persons  who  were  desirous  of  subscribing  to 
this  loan,  wanted  to  know  authoritatively,  wThether  the  principal  of  the 
bonds  was  payable  in  coin  as  well  as  the  interest.  In  order  to  have  the 
proof  in  hand  to  satisfy  people  on  this  point,  Fisk  &  Hatch,  at  the  very 
time  they  were  negotiating  large  amounts  of  this  loan,  addressed  a  letter 
to  the  Secretary  of  the  Treasury  on  the  3d  of  August,  18G3,  and  received 
from  him  an  official  reply,  signed  by  the  Assistant  Secretary  of  the  Treas 
ury,  which  was  immediately  published  in  the  New  York  Times,  as  follows: 

THE  POPULAR  LOAN. 

To  the  Editor  of  the  New  York  Times:— We  are  receiving  numerous  inqui 
ries  as  to  whether  the  United  States  5-20  bonds  are  redeemable  in  gold. 
We  have  received  a  letter  from  the  Treasury  Department  most  satisfac 
torily  answering  this  question,  (as  it  was  once  before  answered  by  Mr. 
Chase,)  a  copy  of  which  we  hand  you  herewith.  The  popular  character 
of  this  loan,  and  its  wide  distribution  among  the  people,  renders  the  sub 
ject  one  of  universal  public  interest  and  importance,  and  we  presume  the 
publication  of  this  letter  will  be  acceptable  to  your  readers. 

(Signed,)  FISK  &  HATCH,  Bankers. 

TREASURY  DEPARTMENT,  WASHINGTON,  D.  C.,  \ 
August  5th,  1863.  S 

Gentlemen— Your  letter  of  the  3d  instant,  relative  to  the  redemption  of 
6  per  cent.  5-20  bonds  of  the  loan  of  February  25,  1862,  has  been  received. 
The  following  is  the  decision  of  the  Secretary  of  the  Treasury  in  regard  to 
the  redemption  of  the  public  debt:  'All  coupon  and  registered  bonds 
forming  a  part  of  the  permanent  loan  of  the  United  States,  will  be  redeemed 
in  gold.  The  5-20  sixes,  being  redeemable  at  any  time  within  twenty  years 
after  the  lapse  of  five  years,  belong  to  the  permanent  loan,  and  so  also  do 
the  twenty  years  sixes  of  July  17,  1861,  into  which  the  three  years  7-30s 
are  convertible.  All  obligations  and  notes  forming  a  part  of  the  tempo 
rary  loan  will  be  paid  at  maturity  in  United  States  notes,  unless  before 
such  maturity  payment  in  specie  shall  have  been  generally  resumed.  The 
7-30  three  year  bonds  or  notes  form  part  of  the  temporary  loan,  with  the 
privilege  of  conversion  into  20  years  sixes,  in  sums  not  less  than  $500. 
They  will  therefore  be  paid,  if  the  holders  prefer  payment  to  conversion. 
in  United  States  notes. 

GEORGE  HARRINGTON, 
Acting  Secretary  of  the  Treasury. 
To  Messrs.  FISK  &  HATCH,  Bankers,  New  York. 

This  official  letter  from  the  Treasury  Department,  in  addition  to  its 
being  published  in  all  the  newspapers,  was  published  in  hand-bill  form, 
(one  of  the  original  hand-bills  being  now  in  my  possession,)  and  sent 
broadcast  among  the  people,  to  induce  them  to  come  forward  and  take  up 
these  bonds — which  were  then  on  the  market  under  the  direction  of  the 


25 

Secretary  of  the  Treasury,  and  offered  by  him  at  par.  I  was  at  this  time 
actively  engaged  in  negotiating  this  loan.  I  advertised  and  circulated  this 
letter  extensively  myself,  and  gave  copies  of  it  to  subscribers  at  the  time 
of  making  their  subscription  to  this  loan.  I  regarded  these  representa 
tions,  made  by  authority  of  the  Treasury  Department,  and  upon  the  faitli 
of  which  people  were  induced  to  subscribe  for  the  loan,  as  forming  a  part 
of  the  contract,  and  that  the  Government  is  now  bound  to  make  these  rep 
resentations  good;  and  that,  whenever  they  seek  to  redeem  these  bonds, 
the  principal  as  well  as  the  interest  should  be  paid  in  coin.  I  should 
regard  it  as  a  gross  breach  of  faith  on  the  part  of  the  Government  to 
attempt  to  evade  these  declarations,  or  equivocate  in  fulfilling  this  con 
tract,  or  any  part  of  it. 

But  aside  from  these  representations  made  by  the  Secretary,  I  would 
suggest  that  the  plain  meaning  of  the  act  of  '62,  when  read  in  connection 
with  its  title,  leads  to  the  same  conclusion,  and  that  Secretary  Chase,  in 
giving  the  construction  to  the  law  which  he  did  in  negotiating  the  loan, 
gave  a  correct,  practical,  common  sense  decision.  The  argument  of  the 
present  Secretary,  in  his  last  annual  report,  (pages  24.  25  and  2G,)  is  able 
and  conclusive  on  this  point.  The  interpretation  given  to  the  act  by  both 
these  distinguished  Secretaries  is  in  exact  accordance  with  my  intention 
at  the  time  I  drew  and  introduced  the  bill  in  the  House,  in  January,  1862, 
and  as  I  believe  it  was  fully  understood  by  Congress  when  it  passed.  The 
title  of  the  act  is  expressive  of  the  intention  and  purpose  for  which  it  was 
passed,  namely,  'an  act  to  authorize  the  issue  of  United  States  notes,  and 
for  the  redemption  or  funding  thereof,  and  for  funding  the  floating  debt 
of  the  United  States/ 

It  was  intended  by  this  measure,  in  the  imminent  peril  in  which  we 
were  then  placed  by  rebellion,  to  make  a  forced  loan  from  capitalists,  by 
compelling  them  to  take  legal  tender  United  States  notes,  which  should 
be  paid  out  to  the  army  and  navy,  and  for  supplies  and  material  of  war, 
but  at  the  same  time  give  them  a  fair  rate  of  interest  for  the  use  of  their 
money,  by  allowing  them  to  fund  these  legal  tender  notes  as  they  should 
accumulate  in  their  hands  and  not  bearing  interest,  into  a  twenty  years 
bond  bearing  six  per  cent,  interest.  In  the  opening  speech  which  I  made 
in  the  House  on  the  28th  of  January,  1862,  I  said:  'The  demand  notes  put 
in  circulation  would  meet  the  present  exigencies  of  the  Government  in 
the  discharge  of  its  existing  liabilities  to  the  army  and  navy,  and  contrac 
tors  for  supplies,  materials  and  munitions  of  war.  These  notes  would  line! 
their  way  into  all  the  channels  of  trade  among  the  people,  and  as  they 
accumulate  in  the  hands  of  capitalists,  they  would  exchange  them  for  six 
per  cent.  20  years  bonds.  These  circulating  notes  in  the  hands  of  the 
people,  would  enable  them  to  pay  taxes  imposed,  and  would  facilitate  all 
business  operations  between  farmers,  mechanics,  commercial  business 
men  and  banks,  and  be  equally  as  good  as,  and  in  most  cases  better  than, 
the  present  irredeemable  currency  issued  by  the  State  banks.  The  $500.- 
000,000  six  per  cent,  twenty  years  bonds  in  the  hands  of  the  Secretary  of 
the  Treasury,  ready  to  be  issued,  would  afford  ample  opportunity  for 
funding  the  Treasury  notes  as  fast  as  capitalists  might  desire  to  exchange 
notes  not  bearing  interest  for  coupon  bonds  of  the  United  States  bearing 
six  per  cent,  interest,  and  amply  secured  by  a  tax  on  the  people  and  all 
their  property.  In  this  way  the  Government  will  be  able  to  get  along 
with  its  immediate  and  pressing  necessities,  without  being  obliged  to 
force  its  bonds  on  the  market  at  ruinous  rates  of  discount;  the  people 


26 

under  heavy  taxation  will  be  shielded  against  high  rates  of  interest,  and 
the  capitalists  will  be  afforded  a  fair  compensation  for  the  use  of  their 
money  during  the  pending  struggle  of  the  country  for  national  existence. 

*A  suspension  of  specie  payments  is  greatly  to  be  deplored,  but  it  is  not 
a  fatal  step  in  an  exigency  like  the  present.  The  British  Government  and 
the  Bank  of  England  remained  under  suspension  of  specie  payments 
from  1797  to  1821-2,  a  period  of  twenty-five  years.  Gold  is  not  as  valuable 
as  are  the  productions  of  the  farmer  and  mechanic,  for  it  is  not  as  indis 
pensable  as  food  and  raiment.  Our  army  and  navy  must  have  what  is 
more  valuable  to  them  than  gold  or  silver — they  must  have  food,  clothing 
and  the  material  of  war.  Treasury  notes,  issued  by  the  Government  on 
the  faith  of  the  whole  people,  will  purchase  these  indispensable  articles, 
and  the  war  can  be  prosecuted  until  we  can  enforce  obedience  to  the  Con 
stitution  and  laws,  and  an  honorable  peace  be  thereby  secured.  This 
being  accomplished,  I  will  be  among  the  first  to  advocate  a  speedy  return 
to  specie  payments,  and  all  measures  that  are  calculated  to  preserve  the 
honor  and  dignity  of  the  Government  in  time  of  peace,  and  which  I  regret 
are  not  practicable  in.  the  prosecution  of  this  war.' 

These  are,  in  part,  the  remarks  I  made  in  the  House  on  the  loan  bill 
introduced  by  me,  and  which  became  a  law  February  25th,  18G2.  The 
operation  of  the  bill,  in  the  issue  of  the  legal  tender  notes,  the  paying 
them  out  to  the  army  and  navy,  their  final  funding  into  a  twenty  years 
six  per  cent,  bonds,  have  been  substantially  what  I  stated  would  be  its 
operation  at  the  time  I  introduced  it  into  the  House.  The  object  of  the 
bill  was  to  provide  the  means  by  which  the  floating  and  temporary  debt, 
then  bearing  heavily  upon  the  Treasury,  might,  b}'  the  operation  of  the 
act,  be  funded  into  a  long  bond  without  a  heavy  sacrifice  in  making  the 
negotiation.  Some  gentlemen  are  now  trying  to  reverse  the  obvious 
intent  of  the  act,  and  imftmd  all  this  bonded  debt,  by  again  putting  it 
into  &  floating  and  temporary  form.  I  regard  all  these  late  shifts  and 
quibbles  to  unsettle  what  is  already  honorably  fixed  and  determined  by 
the  Treasury  Department  under  and  in  pursuance  of  law,  as  unworthy  of 
this  great  nation,  unstatesmanlike  in  those  who  advocate  it,  and,  if  per 
sisted  in,  will,  I  think,  inevitably  destroy  the  credit  of  the  Government, 
and  postpone  indefinitely  a  resumption  of  specie  payments. 

Why  take  the  back  track  under  these  funding  loan  bills  ?  Why  open 
the  question  at  all  at  this  time?  The  floating  debt  and  temporary  loans 
are  already  funded,  or  so  nearly  funded  that  there  cannot  be  any  reason 
able  doubt  that,  by  the  15th  of  July  next,  when  the  last  series  of  7-30 
notes  fall  due,  the  whole  will  be  funded  into  bonds,  none  of  which  are 
payable  until  1882,  being  fifteen  years  yet  before  they  become  clue.  The 
Government  is  not  legally  or  morally  bound  to  pay  one  dollar  of  the  prin 
cipal  of  these  bonds  until  they  become  due.  Then  why  trouble  ourselves 
about  funding  that  which  is  already  funded,  especially  when  it  has  to  be 
done  by  repudiating  the  acts  and  declarations  of  the  Secretary  of  the 
Treasury  in  the  discharge  of  his  official  duties ?  Why  raise  the  question 
now  as  to  the  kind  of  money  with  which  we  are  to  pay  bonds  already 
outstanding,  and  which  are  not  becoming  due  until  1882? 

The  $830,000,000  of  three  years  7-30  notes  were  all  negotiated  under 
representations  made  by  the  Treasury  Department,  similar  to  those  made 
in  respect  to  the  5-20  loan  of  '62,  with  an  express  stipulation  that  the 
holders  of  these  notes  should  have  the  privilege  of  converting  them  at 
maturity  into  5-20  bonds.  The  bonds  of  '62,  as  well  as  the  bonds  issued 
in  redemption  of  the  three  series  of  7-30  notes,  all  stand  upon  the  same 


27 

footing,  and  the  Government  is  no  doubt  bound  to  pay  the  principal  as 
well  as  interest  in  coin,  whenever  it  seeks  to  retire  these  bonds  under  the 
five  years  option,  reserved  in  the  face  of  the  bonds.  That  such  is  the 
view  taken  by  the  present  Secretary  of  the  Treasury,  fully  appears  by  his 
letter  to  L.  P.  Morton  &  Co.,  bankers  in  New  York,  in  which  he  says : 

TREASURY  DEPARTMENT,  Nov.  15,  1866. 

Gentlemen — Your  favor  of  the  13th  instant  is  received.  I  regard,  as  did 
also  my  predecessors,  all  bonds  of  the  United  States  as  payable  in  coin. 
The  bonds  that  have  matured  since  the  suspension  of  specie  payments 
have  been  so  paid,  and  I  have  no  doubt  that  the  saine  will  be  true  of  all 
others.  This  being,  as  I  understand  it  to  be,  the  established  policy  of  the 
Government,  the  5-20  bonds  of  1862  will  either  be  called  in  at  the  expira 
tion  of  five  years  from  their  date,  and  paid  in  coin,  or  be  permitted  to  run 
until  the  Government  is  prepared  to  pay  them  in  coin. 
I  am,  very  truly  yours. 

HUGH  McCULLOCH, 

Secretary. 
Messrs.  L.  P.  MORTON  &  Co.,  New  York. 

Under  the  influence  of  this  official  declaration,  most  of  the  bonds  have 
been  taken  on  the  exchange  of  the  7-30  notes,  in  pursuance  of  the  stipula 
tion  on  the  back  of  the  notes,  and  long  before  these  bonds  become  due, 
specie  payments  will  no  doubt  be  resumed,  and  we  shall  then  have  but 
one  standard  of  value,  and  only  one  kind  of  money,  namely,  coin,  or  its 
equivalent,  in  which  to  pay  these  bonds.  Our  population  and  resources 
will  be  nearly  double  then  to  what  they  are  now.  We  shall  be  abundantly 
able  to  pay  at  that  time  in  that  currency  which  is  recognized  by  all  civil 
ized  nations  as  the  true  standard  and  measure  of  value,  and  thereby  the 
honor  and  good  faith  of  the  nation  will  be  fully  maintained. 

I  would  suggest  that  it  is  not  wise  to  prematurely  agitate  the  question, 
and  am  not  able  as  yet  to  see  any  good  reason  for  doing  so.  On  the  con 
trary,  I  think  all  agitation  now,  on  this  branch  of  the  financial  question, 
is  mischievous,  and  calculated  unnecessarily  to  impair  our  credit  at  home 
and  abroad. 

I  would  suggest  further,  that  the  provision  in  the  bill  which  limits  the 
legal  tender  currency  to  $400,000,000,  is  a  good  one,  provided  there  is  any 
sane  man  in  Congress  who  proposes,  in  a  time  of  peace,  to  dilute  and  still 
further  depreciate  the  currency,  by  increasing  it  above  that  sum ;  but  I 
think  the  maximum  of  the  greenback  currency  must  not  exceed  $250,- 
000,000  or  $300,000,000  when  we  reach  the  specie  standard,  if  we  would 
successfully  maintain  specie  payments.  And  it  seems  to  me  that  it  would 
greatly  facilitate  a  resumption  of  specie  payments  if  the  national  banks 
were  required  to  hold  a  part  of  their  reserves  in  coin,  and  that  some  safe 
plan  should  be  devised  by  which  the  sub-treasuries  in  the  principal  cities, 
especially  in  New  York,  could  make  daily  settlements  with  the  banks 
through  the  clearing-house,  and  requiring  only  balances  to  be  paid,  sub 
stantially  in  the  same  manner  as  the  banks  in  the  principal  cities  make 
their  daily  settlements  with  each  other.  In  this  way  no  large  movement 
in  coin  to  or  from  the  sub-Treasury  would  be  necessary,  and  the  daily 
payments  could  be  made  with  comparative  ease.  But  this  letter  is  already 
too  long,  much  longer  than  I  intended  when  I  commenced  it,  and  I  will 
not  enlarge  further  on  this  subject  at  this  time.  I  may  desire  to  make 
some  further  suggestions,  and  if  so,  will  write  you  again. 
I  remain,  very  truly,  your  friend, 

E.  G.  SPAULDING. 


28 

FROM    HON.     F.     E.     SPINNER 

WASHINGTON,  Xov.  9. 

lion.  E.  G.  S2iaulding,  Buffalo,  N.  Y.: 

My  Dear  Sir— Your  note  of  the  6th  inst.  has  been  received.  If  some 
one  who  believes  in  high-toned  swindling  will  write  in  favor  of  open 
repudiation,  I  will  agree  to  give  the  subject  the  consideration  of  a  careful 
reading,  but  I  have  not  the  patience  to  read  anything  advocating  the 
sneaking  expedient  of  paying  the  national  debt  in  depreciated  currency. 

The  Secretary  of  the  Treasury  is  sound  on  this  subject;  and  in  his  forth- 
coining  Annual  Report  will  address  an  argument  to  the  Congress  and  the 
country,  that  1  am  sure  will  please  you  and  those  who  are  neither  knaves 
nor  fools. 

The  finance  question  is  to  become  the  leading  one  in  the  organization 
of  parties,  and  I  had  hoped  that  such  men  as  Butler  and  Stevens  would 
have  remained  with  the  great  body  of  their  friends.  Having  an  abiding- 
faith  in  the  honesty  of  the  people,  I  believe  the  question  will  be  settled 
honestly,  and  that  honest  Americans  will  be  spared  the  shame  of  having 
their  nation  stigmatized  as  a  band  of  cheats  and  swindlers. 
Very  truly,  your  friend, 

F.  E.  SriXXER, 

NATIONAL  CURRENCY LEGAL  TENDER. 

The  avowed  policy  of  the  Government  is  to  retire  the  legal  tender  green 
back  currency,  issued  during  the  war,  and  bring  the  business  of  the 
country  back  to  a  gold  standard,  and  a  resumption  of  specie  payments. 
This  policy  is  avowed  by  the  President  in  his  annual  message,  and  by  the 
Secretary  of  the  Treasury  in  his  Fort  Wayne  speech,  and  in  his  annual 
report.  As  this  policy  will  sooner  or  later  be  carried  out,  it  is  important 
we  should  look  ahead  and  be  prepared  for  the  change.  It  will  take  time 
to  accomplish  so  great  a  result,  and  it  must  be  done  with  great  prudence 
and  discretion,  or  it  will  produce  a  shock  to  the  legitimate  business  of  the 
country,  which  will  paralyze  our  business  operations  and  thereby  dimin 
ish  the  revenues  that  will  be  so  much  needed  to  maintain  the  public  credit. 
Whatever  measures  will  aid  in  promoting  the  healthy  and  legitimate  bus 
iness  of  the  country  during  the  process  of  contraction  will  be  of  essential 
service  both  to  the  Government  and  the  people. 

It  is  not  so  very  important  just  at  this  time,  that  there  should  be  any 
material  change  made  in  the  functions  of  the  national  currency,  but  as  the 
Government  legal  tender  notes  are  withdrawn  from  circulation,  and  the 
contraction  policy  fairly  begun,  I  think  it  will  be  of  great  importance  to 
the  country,  in  giving  stability  to  its  financial  operations,  that  the  national 
currency  should  be,  like  the  Bank  of  England  notes,  made  a  legal  tender, 
except  for  debts  owing  by  the  banks.  I  feel  confident  that  it  would  lessen 
the  liability  to  a  panic,  as  contraction  goes  on,  and  be  useful  and  benefi 
cial  to  the  Government  and  people,  in  maintaining  the  financial  credit 
and  business  of  the  country. 

The  national  currency  is  limited  to  a  proper  amount,  so  that  there  will 
be  no  chance  for  an  over  issue,  and  as  the  banks  issuing  it  are  required  on 
the  resumption  of  specie  payments,  to  redeem  it  in  coin,  I  can  see  no  harm 
that  would  arise  from  making  it  a  legal  tender,  but  on  the  contrary,  much 
good  to  follow  the  enactment  of  such  a  law.  Let  us  consider  this  subject 
a  little  more  in  detail. 

What  the  Government  and  people  want  and  must  have  in  this  great  and 


29 

enterprising  country,  is  a  currency  of  universal  credit  and  uniform  value. 
Such  a  currency  is  a  vital  necessity  to  the  well  being  of  the  business  of  the 
country.  It  should  possess  all  the  attributes  of  money,  adequate  in 
amount,  and  receivable  alike  in  all  payments,  public  and  private.  Men 
engaged  in  large  commercial  transactions  have  no  especial  worship  for 
gold  and  silver,  either  as  money  or  for  ornament ;  but  I  would  not  discard 
those  metals  in  fixing  the  standard  of  value  of  paper  money,  and  the  rela 
tive  value  of  commodities  and  services.  In  devising  and  regulating  a 
system  of  national  currency,  I  would  have  coin  and  paper  money  as  nearly 
on  an  equality  as  it  is  possible  by  having  the  paper  convertible  into  coin 
on  demand. 

I  know  it  is  insisted  by  some  persons  that  the  only  money  is  coined 
metal,  and  that  paper  money  as  its  substitute,  is  only  credit.  This  may 
be  true  in  a  certain  sense,  but  at  the  same  time  both  coined  money  and 
paper  money  are  the  creation  of  law,  and  it  is  equally  true  that  credit 
underlies  the  whole  financial  operations  of  the  Government  and  people, 
and  if  that  credit  is  broken  down,  the  Government  and  people  will  become 
bankrupt,  business  paralyzed  and  revenues  largely  diminished.  Coined 
money  like  paper  money  is  made  in  pursuance  of  statute  law,  and  has 
impressed  upon  it  the  Government  stamp,  indicating  its  weight  and  purity. 
This  stamp  does  not,  however,  give  the  metal  its  value,  the  value  is  in  the 
metal  independent  of  the  stamp,  but  gold  of  individuals  so  coined  into 
eagles  under  the  laws  of  the  United  States,  does  determine  the  rate  in 
arithmetical  terms  at  which  the  metal  thus  coined  shall  be  a  legal  tender, 
and  the  standard  of  value  in  all  exchanges  and  payments,  and  this  makes 
it  by  law  money.  Paper  money  is  made  by  a  somewhat  different  process, 
but  when  both  are  stamped  with  the  functions  of  money  they  are  both  the 
creation  of  law.  It  is  true  that  gold  and  silver  are  esteemed  a  valuable 
commodity  without  being  coined,  and  are  within  a  small  fraction,  rated 
as  high  in  the  form  of  bullion,  as  in  the  form  of  coin.  The  coined  money 
rests  on  its  own  inherent  or  estimated  value,  while  the  paper  money  is 
based  upon  a  well-founded  credit.  A  payment  in  coin  or  bullion  closes 
the  transaction,  because  the  bargained  for  equivalent  is  rendered  at  once, 
leaving  no  credit  to  be  upheld  or  promise  to  be  performed  in  the  future. 
United  States  demand  Treasury  notes,  are  also  by  law  made  lawful  money 
and  a  legal  tender  as  a  substitute  for  coin,  and  their  value  is  based  upon 
the  credit  of  the  Government,  and  all  the  taxable  property  under  its  juris 
diction.  If  they  were  not  issued  in  excess  they  would  not  be  below  the 
gold  standard,  and  would  constitute  as  good,  and  even  a  better  currency 
than  coin,  because  less  expensive  and  more  convenient,  and  because  they 
are  based  on  a  well  founded  credit,  no  less  than  an  adequate  tax  on  all  the 
real  and  personal  property  of  the  country.  The  principal  difference 
between  coin  and  paper  money  may  be  stated  thus:  the  exchange  and 
delivery  of  one  hundred  bushels  of  wheat  for  one  hundred  dollars,  in 
value  of  gold  bars  or  coined  gold,  the  transaction  is  closed  on  the  spot,  by 
each  party  delivering  to  the  other,  what  is  regarded  by  them  as  an  equiv 
alent;  according  to  the  estimation  of  both  parties,  it  is  an  exchange  of 
equivalent  values.  In  such  a  transaction,  no  credit  is  given  on  either  side ; 
but  if  instead  of  gold,  the  purchaser  of  the  wheat  should  deliver  to  the 
seller  in  exchange  for  it,  one  hundred  dollars  in  paper  money,  the  equiva 
lent  for  the  wheat,  although  perfectly  secured,  would  not  be  rendered  on 
the  spot,  but  a  credit  would  intervene  in  taking  the  paper  money,  which 
contained  only  a  promise  to  deliver  one  hundred  dollars  in  gold  at  another 


80 

time.  In  one  sense  it  is  true  that  the  seller  of  the  wheat  takes  even  gold 
on  a  credit,  trusting  that  it  will  continue  at  all  times  as  valuable  as  it  now 
is,  notwithstanding  it  possesses  very  few  useful  qualities,  and  is  not  intrin 
sically  as  valuable  as  iron.  Franklin  says,  'that  the  value  of  gold  and 
silver  rests  chiefly  in  the  estimation  they  happen  to  be  in,  among  the  gen 
erality  of  nations,  and  the  credit  given  to  the  opinion  that  that  estimation 
will  continue;  otherwise  a  pound  of  gold  would  not  be  a  real  equivalent 
for  a  bushel  of  wheat.'  It  is  the  universal  estimation  in  which  gold  and 
silver  are  held,  that  gives  them  their  present  value,  and  not  the  labor 
expended  upon  them,  or  any  particularly  useful  qualities  contained  in  the 
metal  itself.  Any  other  well  founded  credit  is  as  much  an  equivalent  as 
gold  and  silver,  and  in  some  cases  more  so,  or  it  would  not  be  preferred  by 
commercial  people  in  different  countries.  For  this  reason  a  well  secured 
convertible  paper  money,  in  a  normal  state  of  the  business  of  the  country, 
is  fully  equal  to  gold  and  silver,  because  less  expensive,  and  more  conven 
ient.  But  where  commercial  transactions  are  small,  and  among  barbarous 
nations  where  credit  is  unsafe,  gold  and  silver,  on  account  of  their  compar 
atively  steady  value,  and  the  universal  estimation  in  which  they  are  held 
by  all  mankind,  no  doubt  constitute  the  best  money.  These  precious 
metals,  so  called,  being  limited  in  amount,  and  used  extensively  in  the 
arts  and  luxuries  of  life,  are  desired  the  world  over,  not  only  by  civilized, 
but  by  barbarous  nations,  and  having  great  estimated  value  in  small  bulk, 
are  easily  transported  from  continent  to  continent.  This  universal  esti 
mation  gives  them  pretty  steady  value  as  money,  and  an  equally  steady 
value  in  the  arts,  and  for  ornament.  They  therefore  constitute  at  present, 
the  best  standard  by  which  to  measure  the  relative  value  of  all  other  com 
modities.  They  are,  therefore,  the  standard  of  value  in  all  countries,  and 
it  will  be  very  difficult,  if  not  impossible,  for  the  nations  of  the  world  to 
agree  upon  any  other  standard  of  value.  They  have  not  become  so  by 
reason  of  a  congress  of  nations,  nor  by  any  concert  of  action  among  them, 
but  by  the  quiet  action  of  commerce  among  the  people  for  many  centuries, 
and  in  all  countries  and  climes.  Gold  and  silver  therefore,  are  the  univer 
sal  standard  of  value,  made  so  by  the  acquiescence  of  all  mankind,  and 
consequently  all  foreign  balances  are  settled  in  gold  and  silver.  But 
owing  to  the  scarcity  of  the  precious  metals,  and  the  great  expense  attend 
ing  their  use  as  money,  and  the  risk  of  transporting  them  from  place  to 
place,  credit  has  been  resorted  to  in  some  form  by  all  civilized  countries, 
under  well  established  Governments,  as  a  substitute  for  gold  and  silver, 
and  especially  for  domestic  purposes ;  for  instance,  the  Bank  of  England 
notes,  for  the  British  Empire. 

Bills  of  exchange,  promissory  notes,  credits  on  bank  ledgers,  checks, 
bank  bills,  and  clearing  house  certificates  are  among  the  forms  of  credit 
chiefly  used  in  commerce  at  the  present  time.  In  consequence  of  this 
scarcity  of  gold  and  silver  money  adequate  to  the  wants  of  commerce, 
these  forms  of  credit  have  been  extensively  used  by  the  people  of  all  com 
mercial  countries,  because  business  in  this  form  could  be  done  more 
cheaply,  with  much  greater  facility,  and  in  vastly  greater  amounts,  than 
it  could  be  done  by  contracting  it  to  the  actual  use  of  gold  and  silver  in 
each  transaction;  and  although  there  is  no  actual  use  of  coin  in  the 
exchange  of  commodities  and  services,  nevertheless  all  these  credit  trans 
actions  have  a  relation  to  gold  and  silver,  as  the  standard  or  measure  of 
value,  and  ought  to  have  an  equally  close  relation  to  the  amount  of  com 
modities  and  services  to  be  exchanged ;  and  to  be  safe,  should  never  exceed 


a 

the  wants  of  legitimate  business.  It  is  generally  conceded  that  these  dif 
ferent  forms  of  credit,  when  not  carried  to  excess,  are  of  the  greatest 
usefulness  to  every  well  regulated  society.  So  apparent  are  their  ad van  v* 
tages,  that  they  are  deemed  indispensable,  and  that  without  them, 
present  large  volume  of  commercial  transactions  could  not  be  carried  on. 
Host  of  these  forms  of  credit  have  grown  into  use  by  the  necessities  of 
commerce  for  centuries  past,  and  are  governed  by  universal  commercial 
law,  modified  in  some  particulars  by  local  statutes,  but  generally  the  law 
merchant  regulates  and  governs  all  of  them,  except  in  the  case  of  bank 
bills  and  Government  paper  money,  which  are  wholly  the  creation  of  local 
laws,  and  are  regulated  and  governed  by  the  statute  laws  under  which 
they  are  created.  This  brings  me  to  the  consideration  of  a  paper  currency 
authorized  and  regulated  by  statute  laws. 

NATIONAL   CURRENCY — LEGAL    TENDER. 

In  discussing  the  subject  of  a  national  currency,  and  the  functions  that 
should  be  imparted  to  it  by  law,  I  assume  that  Congress  deems  it  necessary 
and  proper  to  have  a  paper  national  currency,  not  only  to  carry  on  the 
fiscal  operations  of  the  Government,  but  also  to  facilitate  the  business 
operations  of  the  people ;  and  that  such  a  currency  is  created  because  it  is 
the  duty  of  the  general  Government  to  provide  a  domestic  circulating 
medium  of  uniform  value,  to  be  used  and  circulated  as  money  in  all  parts 
of  the  United  States.  Now,  if  it  is  desirable  and  proper  to  have  a  national 
paper  currency  at  all,  as  I  think  it  is,  it  seems  to  me  to  be  obvious  that  it 
should  be  the  best  that  the  Government  is  capable  of  making.  If  it  is 
necessary  to  create  a  paper  currency,  as  a  substitute  for,  or  as  a  represen 
tative  of,  gold  and  silver,  why  not  give  it  all  the  attributes  of  money,  so 
far  forth  as  it  can  be  made  so  by  law  ?  Why  should  not  Congress  confer 
upon  it  in  all  respects,  the  highest  qualities  possible  to  make  it  suitable, 
useful  and  acceptable  in  all  the  ramified  operations  of  the  Government  and 
people  over  the  whole  country  ?  This  currency  is  a  creation  of  the  Gov 
ernment.  Its  object  is  to  make  money  for  circulation;  to  make  it  of 
uniform  value  all  over  the  United  States  in  effecting  exchanges  and  pay 
ments,  and  as  nearly  equal  to  gold  and  silver  as  it  is  possible  to  make  it. 

This  great  nation  surely  ought  not  to  create  a  currency  inferior  to  the 
best  paper  money  in  the  world.  It  should  have  all  the  attributes  of  money 
to  pay  debts  and  facilitate  exchanges.  It  should  be  backed  by  the  whole 
power  of  the  Government  to  make  it  what  it  purports  to  be,  a  notional 
currency,  and  the  representative  of  gold  and  silver,  and  convertible  into 
gold  coin  on  demand.  Nothing  should  be  withheld  by  Congress  which 
would  in  any  degree  add  to  the  stability  or  usefulness  of  such  a  currency. 
It  is  created  as  an  instrument  of  usefulness  to  benefit  the  Government  and 
people,  and  if  made  at  all,  it  should  be,  like  a  locomotive,  or  any  other 
instrument,  the  best  that  can  be  made.  I  took  this  ground  on  the  passage 
of  the  legal  tender  act  introduced  by  me  in  1862.  I  then  said  that  if  we 
issued  a  Government  paper  money  at  all,  it  ought  to  have  imparted  to  it 
the  highest  legal  sanction  that  could  be  given  to  it  by  the  Government,  to 
make  it  fulfill  the  purpose  for  which  it  was  made.  There  are  very  few 
business  men  who  now  question  the  wisdom  of  that  enactment.  Though 
in  the  administration  of  the  laws  authorizing  it,  more  was  unnecessarily 
issued,  and  less  funded,  than  was  intended  by  the  originators  of  the 
measure. 

The  British  Government  is  the  great  pioneer  in  providing  a  paper 


32 

national  currency.  The  Bank  of  England,  a  creation  of  that  Government, 
has  existed  one  hundred  and  seventy-two  years.  She  has  had  great  expe 
rience  in  the  issue,  circulation  and  redemption  of  the  circulating  notes  of 
that  bank;  and  the  British  Empire  has  increased  in  material  wealth  and 
power  with  astonishing  rapidity  since  the  bank  was  established.  Previous 
to  1834,  the  circulating  notes  of  the  Bank  of  England  were  not  made  a 
legal  tender,  but  after  an  experience  of  over  140  years,  she  passed  an  act 
making  them  a  legal  tender  for  all  debts,  except  those  owing  by  the  bank 
itself;  and  for  the  avowed  reason  that  it  would  not  remove  any  of  the 
guards  against  over-issues,  and  that  it  would  increase  the  stability  of  the 
bank,  guard  against  panics,  and  consequently  improve  the  whole  monetary 
system  of  that  empire.  Since  that  act  of  Parliament  was  passed,  she 
requires  the  notes  of  the  bank  to  be  perfectly  secured  by  gold  and  Govern 
ment  stocks ;  requires  the  bank  to  redeem  in  coin  on  demand  at  its  own 
counter,  and  then  makes  them  a  general  legal  tender  except  at  the  bank. 

The  Bank  of  England  notes  admirably  perform  the  functions  of  money. 
They  are  current  money  in  all  parts  of  the  empire.  They  are  probably 
the  most  perfect  paper  currency  in  the  world,  because  they  are  not  only 
perfectly  secured  and  redeemable  in  gold  on  demand  at  the  bank,  but 
they  have  imparted  to  them  by  law  the  functions  of  money  in  the  pay 
ment  of  debts  and  effecting  exchanges,  in  the  cities  and  villages  remote 
from  London,  as  well  as  in  the  metropolis  itself.  They  are  backed  by  the 
whole  power  of  the  British  Government,  and  circulate  with  as  much 
vitality  at  the  circumference  as  at  the  centre  of  the  empire.  The  bank 
and  its  circulating  notes  are  as  stable  and  secure  as  the  Government  itself. 

Why  should  we  not  profit  by  the  experience  and  example  of  the  British 
Government  in  respect  to  its  national  currency  ?  "VVe  have  provided  by 
Congressional  enactment  for  the  organization  of  a  system  of  national 
banks,  and  the  issue  of  a  national  currency.  This  was  deemed  a  necessary 
measure  for  the  support  of  the  Government  in  providing  a  circulating 
medium  to  facilitate  the  easy  exchange  of  commodities,  thereby  stimu 
lating  enterprise,  industry  and  production ;  adding  to  the  ability  of  the 
people  to  pay  revenue,  and  furnishing  a  currency  in  which  the  internal 
taxes  may  be  paid.  The  leading  idea  was  to  combine  the  capital  of  indi 
viduals  with  the  credit  of  the  Government,  to  provide  a  national  currency, 
and  throw  the  burthens  of  redeeming  such  currency  upon  the  banks  that 
issue  it,  the  Government  only  guaranteeing  its  ultimate  payment. 

The  national  currency  act  is  generally  right  as  far  as  it  goes.  It  limits 
the  amount  to  $300,000,000;  requires  the  circulating  notes  to  be  well 
secured  by  gold-bearing  Government  bonds,  deposited  with  the  Treasurer 
of  the  United  States;  requires  each  bank  to  redeem  its  circulating  notes 
in  lawful  money  on  demand,  and  to  keep  an  adequate  reserve  for  that 
purpose ;  makes  them  a  legal  tender  for  all  taxes  and  other  debts  due  to 
the  Government,  except  customs,  and  for  all  debts  owing  by  the  Govern 
ment,  except  principal  and  interest  of  the  funded  debt;  it  also  makes 
them  receivable  by  each  national  bank  for  all  ordinary  debts  clue  to  them, 
and  each  bank,  designated  as  a  depository,  is  also  required  to  receive  it 
on  deposit  from  all  public  officers.  These  are  important  provisions  in  the 
law  for  nationalizing  this  currency,  and  it  consequently  obtains  a  wide 
circulation.  I  would  not  change  or  alter  any  one  of  these  provisions  for 
de-centralizing  the  currency,  but  I  think  it  does  not  go  quite  far  enough  in 
that  direction.  It  will  be  perceived  that  all  persons  in  the  employ  of  the 
Government  are  compelled  to  receive  it  in  payment  for  salaries  and  for 


33 

materials  and  other  services  performed  for  the  Government.  It  is  now  iii 
effect  made  a  legal  tender  from  the  Government  to  all  this  class  of  per 
sons,  including  the  salary  of  the  President,  Cabinet,  Members  of  Congress 
and  the  army  and  navy.  If  the  President  and  other  officers  of  the  Gov 
ernment  are  obliged  to  receive  it  in  payment  for  their  salaries,  why  should 
not  everybody  else  be  required  to  take  it  from  them  for  all  ordinary  debts 
they  may  incur?  I  can  see  no  valid  reason  why  they  should  be  a  legal 
tender  to  persons  employed  by  the  Government,  unless  such  persons  can 
also  compel  other  parties  to  receive  it  from  them.  I  think  that  sound 
policy  requires  the  act  to  be  still  further  extended.  I  would  go  one  step 
further  and  make  the  national  currency,  like  the  Bank  of  England  notes, 
a  general  legal  tender,  so  long  as  the  bank  issuing  it,  redeem  in  lawful 
money,  except  that  the  currency  issued  by  any  bank  separately  should 
not  be  a  legal  tender  for  any  debts  such  bank  might  itself  owe. 

I  would  not  relax  any  of  the  duties  or  obligations  now  imposed  on  the 
banks.  I  would  compel  them  to  redeem  their  circulation  in  legal  tender 
United  States  notes  on  demand,  until  the  resumptions  of  specie  payments, 
and  after  that  in  specie,  and  oblige  them  to  keep  a  sufficient  reserve  for 
that  purpose.  The  reason  for  such  additional  legislation  would  not  be  so 
much  for  the  benefit  of  the  banks,  as  it  would  be  to  benefit  the  public,  by 
providing  a  domestic  currency,  made  legal  tender  the  same  as  gold 
belonging  to  individuals  is  made  a  tender,  and  which  could  be  used  to  the 
greatest  common  advantage  among  all  classes  of  people  in  all  parts  of  the 
country.  I  would  make  it  a  legal  tender  because  it  would  lessen  the 
demand  for  coin,  and  have  a  tendency  to  prevent  unnecessary  runs  on  the 
banks  to  obtain  it.  It  is  argued  by  many  persons,  with  much  plausibility, 
that  a  well  secured  paper  currency  would  be  better  in  many  respects,  if 
not  made  redeemable  in  coin,  for  the  reason  that  coin  is  scarce  as  com 
pared  with  the  volume  of  business  to  be  done ;  that  it  is  easily  exported, 
and  that  when  brought  to  the  test  of  requiring  the  paper  money  issued  to 
be  redeemed  in  coin  it  has  always  failed,  and  always  will  fail,  because 
there  is  never  available  coin  enough  for  that  purpose.  I  admit  that  the 
frequent  suspension  of  specie  payments,  whenever  there  is  a  panic  or 
revulsion,  furnishes  an  argument  in  favor  of  those  who  present  this  view 
of  the  subject,  but  as  no  proper  standard  can  be  had  at  present,  without 
making  paper  currency  equal  to  coin,  I  think  it  must  be  convertible  into 
coin  on  demand.  Every  attribute,  however,  that  can  be  given  to  improve 
its  quality  will  lessen  the  necessity  for  its  redemption  in  coin,  and  conse 
quently  the  more  steady  and  uniform  will  be  the  business  of  the  country. 

With  this  object  in  view,  I  can  see  no  valid  reason  why  the  highest 
legal  sanction  should  not  be  imparted  to  this  currency  by  the  Govern 
ment,  which  holds  the  pledged  security  and  guarantees  its  payments,  not 
only  to  give  it  stability,  and  guard  against  panics  and  suspensions  of 
specie  payments,  but  to  make  it  useful  to  the  people  as  money,  in  the 
remote  districts  as  well  as  at  the  centre  of  business,  and  make  it  fulfil  in 
the  highest  possible  degree  the  object  for  which  it  was  created,  a  national 

currency. 

E.  G.  SPAULDIXG. 

February  28,  1S6G. 


84 

LEGAL    TENDER   IN   TIME    OF    PEACE. 

BUFFALO,  December  9,  1868. 
Hon.  Hugh  McCullocJi,  Secretary  of  the  Treasury: 

Dear  Sir — Will  you  be  kind  enough  to  send  me  a  pamphlet  copy  of  your 
Annual  Report ;  I  have  seen  a  synopsis  of  it  in  the  newspapers,  and  desire 
to  study  it  in  a  more  readable  form.  I  have  always  read  your  able  and 
well-matured  reports  with  pleasure  and  profit.  I  judge,  from  the  extracts 
of  the  report  which  I  have  seen,  that  you  continue  firm  in  the  opinion 
that  we  should  get  rid  of  the  evils  of  a  depreciated  currency  by  returning 
to  the  specie  standard  at  the  earliest  practicable  moment ;  this  is  the  first 
great  and  important  duty  of  the  Government,  and  I  sincerely  hope  that 
efficient  measures  will  be  adopted  to  that  end  at  the  present  session  of 
Congress. 

You  justly  observe  that  the  legal  tender  act  was  adopted  as  a  war  meas 
ure — a  measure  of  necessity  to  sustain  the  army  and  navy  while  crushing 
the  rebellion.  In  the  summer  and  fall  of  1861,  all  the  great  powers 
expressly  granted  in  the  Constitution  had  been  brought  into  active  exer 
cise  in  bringing  into  the  field  an  army  of  half  a  million  of  men,  which 
had  to  be  fed,  clothed  and  provided  with  all  the  material  of  war  necessary 
to  make  them  effective,  requiring  an  average  daily  expenditure  of  $2,000,- 
000.  This  required  very  large  amounts  of  money,  and  we  had  to  have  it 
right  off— delay  would  have  been  fatal.  The  banks  in  New  York,  Boston 
and  Philadelphia  had  exhausted  themselves  in  loaning  to  the  Government 
$150,000,000  in  gold  during  the  summer  and  fall  of  1861.  A  large  part  of 
the  available  gold  in  the  country  had  thus  been  paid  over  to  the  Govern 
ment,  and  expended  during  that  time,  and  so  scattered  that  it  was  not 
available  as  a  reserve  for  the  banks,  or  in  a  situation  to  be  re-loaned  to  the 
Government.  The  Government  and  banks  suspended  specie  payments  on 
the  last  of  December,  1861.  No  more  gold  could  be  loaned  because  it  was 
not  to  be  had,  except  in  small  and  wholly  inadequate  amounts.  State 
bank  bills  could  be  obtained,  but  the  banks  having  suspended  specie  pay 
ments  this  currency  was  depreciated,  and  was  only  local  in  character 
and  credit. 

In  this  great  emergency,  with  this  large  army  to  be  supported  and  the 
navy  to  be  maintained,  and  which  were  organized  under  the  unlimited 
war  powers  expressly  granted  in  the  Constitution,  there  arose  an  over 
whelming  necessity  for  resorting  to  the  incidental  and  implied  powers, 
and  especially  to  that  provision  in  the  Constitution  which  empowers  Con 
gress  '  to  make  all  laws  which  shall  be  necessary  and  proper  for  carrying 
into  execution  the  foreign  powers  and  all  other  powers  vested  by  this 
Constitution  in  the  Government  of  the  United  States,  or  any  department 
or  officer  thereof.'  In  the  imminent  peril  in  \vhich  we  were  then  placed 
by  a  gigantic  rebellion,  Congress  decided  that  the  legal  tender  act  was 
a  measure  necessary  and  proper  to  carry  into  effect  those  powers  expressly 
granted  in  the  Constitution,  to  maintain  the  army  and  support  the  navy. 
Secretary  Chase  relied  at  this  time  mainly  upon  the  passage  of  the  national 
currency  act  to  furnish  the  means,  but  it  appeared  to  me  that  it  would  be 
wholly  inadequate,  and  besides  it  could  not  be  made  available  quick 
enough.  I  therefore  introduced  the  legal  tender  bill  early  in  January, 
1862,  immediately  after  the  suspension  of  specie  payments.  In  this  great 
crisis  I  advocated  the  bill  as  a  war  measure,  a  measure  of  temporary 
relief  to  the  Treasury,  and  on  the  ground  that  it  was  an  imperative  neces- 


36 

sity  to  preserve  the  life  of  the  nation.  I  conceded  that  it  was  a  forced 
loan,  and  could  only  be  justified  on  grounds  of  necessity. 

As  a  war  measure  passed  during  war,  continuing  during  the  war,  and  as 
long  as  the  exigency  lasted,  I  believe  it  was  necessary  and  proper  to  suc 
cessfully  carry  on  the  war,  and  was  therefore  constitutional.  I  am  equally 
clear,  that  as  a  peace  measure  it  is  unconstitutional.  No  one  would  now 
think  of  passing  a  legal  tender  act  making  the  promises  of  the  Govern 
ment,  (a  mere  form  of  credit, )  a  legal  tender  in  payment  of  '  all  debts, 
public  and  private.'  Such  a  law,  passed  while  the  Government  is  on  a 
peace  footing,  could  not  be  sustained  for  one  moment. 

I  think  now  that  it  is  unfortunate  that  we  did  not  have  incorporated 
into  the  original  legal  tender  act,  at  the  time  of  its  passage,  a  provision 
that  the  legal  tender  clause  should  cease  to  be  operative  in  one  year  after 
the  close  of  the  war.  In  that  case  all  parties  would  have  shaped  their 
business  accordingly,  and  the  law  would  have  served  its  purpose  as  a  war 
measure,  and  would  not  have  been  continued  (as  I  think  unnecessarily,) 
so  long  after  the  close  of  the  war. 

I  see  that  the  constitutionality  of  the  law  has  finally  come  up  for  decision 
before  the  Supreme  Court  of  the  United  States,  at  Washington.  If  the 
Court  held  been  called  upon  to  decide  the  question  during  the  war,  or  at  its 
close,  they  would  most  likely  have  decided  that  the  law  was  valid,  inas 
much  as  Congress  had  decided  that  it  was  a  necessary  and  proper  means 
to  be  used  in  crushing  the  rebellion ;  but  the  law  has  been  continued  in 
force  so  long  after  the  close  of  the  war  without  any  real  necessity  for  it, 
that  I  should  not  be  much  surprised  if  the  Court  should  now  declare  it 
unconstitutional. 

Three  great  measures  were  adopted  by  the  Government,  which,  in  my 
judgment,  were  necessary  to  crush  the  rebellion  and  maintain  the  national 
unity,  viz. : 

1.  The  legal  tender  act,  by  which  the  credit  of  the  Government  was 
brought  into  immediate  action  in  the  most  available  form. 

2.  Emancipation,  by  which  4,000,000  slaves  became  intensely  interested 
in  the  Union  cause. 

3.  The  draft,  by  which  the  army  was  speedily  re-inforced  at  the  turning 
point  of  the  rebellion. 

These  three  measures,  backed  by  the  people,  and  enforced  by  the  army 
and  navy,  finally  gave  us  a  national  triumph. 

If  Congress  will  not  act  promptly  in  devising  some  plan  for  bringing 
the  legal  tender  greenback  currency  on  a  par  with  gold,  rather  than  con 
tinue  the  demoralization  incident  to  a  postponement  of  specie  payments, 
it  will  perhaps  be  as  well  for  the  country  in  a  long  run,  if  the  Court,  on 
due  deliberation,  should  decide  the  legal  tender  clause  to  be  unconstitu 
tional.  This  would  involve  serious  consequences  for  a  while,  and  business 
arrangements  would  be  materially  affected,  but  we  would  very  soon 
accommodate  ourselves  to  the  situation,  and  we  would  then  emerge  from 
the  evils  of  an  irredeemable  currency,  and  all  business  operations  would 
be  established  on  a  firm  and  enduring  basis. 

This  letter  is  much  longer  than  I  intended  when  I  sat  down  to  write, 
and  I  trust  you  will  pardon  me  for  writing  so  much. 
I  remain,  yours  truly, 

E.  G.  SPAULDING. 


36 

PRESIDENT  LINCOLN'S  VETO. 

Presidents  Message  in  favor  of  a  National  Currency,  but  vetoing  irredeemable 
bank  notes  in  the  District  of  Columbia,  June  23,  1862. 

To  the  Senate  of  the  United  States  : 

The  bill  which  has  passed  the  House  of  Representatives  and  the  Senate, 
entitled,  'An  act  to  repeal  that  part  of  an  act  of  Congress  which  prohibits 
the  circulation  of  bank  notes  of  a  less  denomination  than  five  dollars  in  the 
District  of  Columbia,'  has  received  my  attentive  consideration,  and  I  now 
return  it  to  the  Senate,  in  which  it  originated,  with  the  following  objec 
tions  : 

1.  The  bill  proposes  to  repeal  the  existing  legislation  prohibiting  the 
circulation  of  bank  notes  of  a  less  denomination  than  five  dollars  within 
the  District  of  Columbia,  without  permitting  the  issuing  of  such  bills  by 
banks  not  now  legally  authorized  to  issue  them.    In  my  judgment  it  will 
be  found  impracticable,  in  the  present  condition  of  the  currency,  to  make 
such  a  discrimination.    The  banks  have  generally  suspended  specie  pay 
ments,  and  a  legal  sanction  given  to  the  circulation  of  the  irredeemable 
notes  of  one  class  of  them  will  almost  certainly  be  so  extended  in  practical 
operation  as  to  include  those  of  all  classes,  whether  authorized  or  unau 
thorized.    If  this  view  be  correct,  the  currency  of  the  District,  should  this 
act  become  a  law,  will  certainly  and  greatly  deteriorate,  to  the  serious 
injury  of  honest  trade  and  honest  labor. 

2.  This  bill  seems  to  contemplate  no  end  which  cannot  be  otherwise 
more  certainly  and  beneficially  attained.    During  the  existing  war,  it  is 
peculiarly  the  duty  of  the  national  Government  to  secure  to  the  people  a 
sound  circulating  medium.    This  duty  has  been,  under  existing  circum 
stances,  satisfactorily  performed,  in  part  at  least,  by  authorizing  the  issue 
of  United  States  notes  receivable  for  all  Government  dues  except  customs, 
and  made  a  legal  tender  for  all  debts,  public  and  private,  except  interest 
on  the  public  debt.    The  object  of  the  bill  submitted  to  me,  namely,  that 
of  providing  a  small  note  currency  during  the  present  suspension,  can  be 
fully  accomplished  by  authorizing  the  issue,  as  part  of  any  new  emission 
of  United  States  notes,  made  necessary  by  the  circumstances  of  the  coun 
try,  of  notes  of  a  similar  character,  but  of  less  denomination  than  five 
dollars.    Such  an  issue  would  answer  all  the  beneficial  purposes  of  the  bill ; 
would  save  a  considerable  amount  to  the  Treasury  in  interest;  would 
greatly  facilitate  payments  to  soldiers  and  other  creditors  of  small  sums, 
and  would  furnish  to  the  people  a  currency  as  safe  as  their  own  Gov 
ernment. 

Entertaining  these  objections  to  the  bill,  I  feel  myself  constrained  to 
withhold  from  it  my  approval,  and  return  it  for  the  further  consideration 

and  action  of  Congress. 

ABRAHAM  LINCOLN. 


SPEECH  OF  HON.  E.  G.  SPAULDING,  OF  NEW  YORK, 

DELIVERED  IN  THE  HOUSE  OF  REPRESENTATIVES, 

Friday,  May  3d,  1862. 

The  House  having  under  consideration  the  bills  to  confiscate  the  prop 
erty  and  free  from  servitude  the  slaves  of  rebels,  Mr.  Spaulcling  said : 

Mr.  SPEAKER — It  seems  to  be  right  and  proper,  while  we  are  taxing 
our  own  loyal  people  to  pay  the  enormous  expenses  of  this  war,  that  we 
should  endeavor  to  make  the  ring-leaders  of  the  rebellion,  who  have 
fomented  and  brought  on  this  terrible  state  of  things,  pay  as  large  a  por 
tion  of  these  expenses  as  is  possible.  To  this  end  it  is  fit  and  proper  that 
Congress  should  exert  all  the  power  it  possesses  in  confiscating  the  prop 
erty  of  rebels,  and  having  it  sold  under  an  order  of  the  court,  and  the 
proceeds  thereof,  paid  into  the  Treasury  of  the  United  States ;  and  also 
that  such  rebels  should  be  deprived  of  the  labor  and  services  of  their 
slaves,  from  which  they  derive  their  chief  support.  These  propositions 
are  now  pending  in  this  House,  and  we  shall  be  called  to  vote  upon  them 
on  Monday  next.  These  are  important  measures,  and  I  desire  to  say  a 
few  words  before  giving  my  vote.  After  the  able  arguments  that  have 
been  made  in  the  Senate  and  House  by  those  who  have  been  especially 
charged  with  the  subject  of  confiscating  the  property  of  rebels  and  the 
emancipation  of  their  slaves.  I  do  not  deem  it  necessary  for  me  to  make 
any  extended  remarks. 

Sir,  the  time  has  come  when  we  must  meet  the  actual  condition  of 
things,  and  dispose  of  these  and  other  momentous  questions  presented  for 
our  consideration  in  a  practical  way,  and  with  a  firm  determination  to 
suppress  this  rebellion  and  establish  law  and  order  in  every  part  of  the 
United  States.  Success,  regardless  of  the  cost,  is  the  all-important  thing 
to  be  attained.  This  rebellion  must  be  crushed  out,  and  all  the  means 
which  God  has  given  us  must,  sooner  or  later,  be  brought  into  requisition 
to  accomplish  that  result.  The  sooner  we  earnestly  put  forth  every  effort, 
and  apply  all  the  means  at  our  command,  the  sooner  will  the  rebellion  be 
suppressed,  and  the  less  of  life  and  treasure  will  be  expended. 

What  is  the  actual  condition  of  things  ?  All  the  horrors  of  war  are 
upon  us.  War  on  a  gigantic  scale — savage,  unrelenting  war  is  waged 
against  us  by  the  rebels.  Not  only  do  they  kill  our  brave  sons  and 
brothers  on  the  field  of  battle,  but  they  murder  them  stealthily,  stab 
and  scalp  them  when  wounded,  and  disfigure  and  mangle  them  after  they 
are  dead.  The  rebels  in  arms  against  us  are  enemies  de  facto,  possessed  of 
all  the  bitterness  and  determination  of  the  most  unrelenting  foreign  ene 
mies.  We  are  obliged  to  accept  this  condition  of  things.  It  has  been 
forced  upon  us  by  their  own  acts.  The  life  of  the  nation  is  attacked,  and 
a  most  determined  effort  made  to  overthrow  the  Government  of  the 


38 

United  States  in  all  of  the  confederate  States.  They  are  our  enemies.  I 
am  disposed,  while  they  are  so  in  rebellion,  to  treat  them  as  enemies,  and 
to  give  them  only  the  rights  of  war,  and  apply  to  them  all  the  disabilities 
and  penalties  of  war. 

As  alien  enemies,  throwing  oft' all  allegiance  to  the  Government,  tramp 
ling  the  Constitution  and  laws  of  the  United  States  under  their  feet,  how 
can  they  claim  any  protection  from  us  ?  As  enemies  de  facto,  they  can 
claim  no  rights  except  the  rights  of  war.  Any  gentleman  on  this  floor 
holding  up  the  Constitution  as  a  shield  to  protect  these  rebels  it  seems  to 
me  has  not  duly  considered  the  subject.  Is  it  possible  that  men  who 
utterly  repudiate  the  Constitution,  confederate  together,  declare  war, 
issue  letters  of  marque  and  reprisal,  and  are  in  open  war  against  us,  can 
claim  any  rights  under  the  Constitution  ?  The  laws  of  war  are  against  it. 
Common  sense  and  common  justice  would  revolt  at  any  such  claim,  even 
if  the  public  law  was  riot  so  emphatically  against  it. 

If  we  were  to  proceed  and  indict  the  traitors  in  arms  against  the  Gov 
ernment  for  treason,  (as  we  have  an  undoubted  right  to  do,)  under  the 
provisions  of  the  Constitution,  then  they  might,  in  such  case,  claim  to 
have  their  criminality  decided  by  the  court,  under  the  strict  rules  of  the 
common  law  and  the  Constitution  and  statute  laws  of  the  United  States. 
In  such  a  case,  the  argument  of  the  gentleman  from  Massachusetts  [Mr. 
Thomas,]  might  have  some  application.  But  when  the  traitors  are 
engaged  in  actual  war,  then  you  apply  to  them  the  laws  of  war.  Having 
themselves  repudiated  the  Constitution,  and  having  expelled  the  United 
States  courts  from  all  the  rebel  States,  so  that  you  cannot  indict  and  try 
them  under  the  ordinary  forms  of  judicial  proceedings,  they  cannot  com 
plin  if  you  apply  to  them  the  laws  which  are  clearly  applicable  to  the 
position  which  they  have  voluntarily,  but  most  criminally,  chosen  for 
themselves-.  Having  declared  war  against  the  United  States,  they  must 
submit  to  all  the  rules  of  civilized  warfare,  and  if  their  property  is  confis 
cated  and  their  slaves  emancipated,  they  have  no  right  to  complain. 

What  is  the  war  power  conferred  on  the  President  and  Congress  ?  By 
the  Constitution,  the  President  is  made  '  Commander-in-Chief  of  the 
army  and  navy  of  the  United  States,  and  of  the  militia  of  the  several  States 
when  called  into  the  actual  service  of  the  United  States.'  The  Constitu 
tion  confers  on  Congress  the  power,  first,  '  to  raise  and  support  armies ;' 
second,  'to  provide  and  maintain  a  navy;'  third,  'to  make  rules  for  the 
government  of  the  land  and  naval  forces;'  fourth,  'to  provide  for  calling 
forth  the  ^militia  to  execute  the  laws  of  the  Union,  suppress  insurrections, 
and  repel  invasions;'  fifth,  'to  grant  letters  of  marque  and  reprisal;'  sixth, 
kto  make  rules  concerning  captures  on  land  and  water;'  seventh,  'to 
Declare  war;r  eighth,  'to  make  all  laws  which  shall  be  necessary  and 
proper  for  carrying  into  execution  the  foregoing  powers.'  In  pursuance 
of  these  war  powers  conferred  on  Congress  by  the  Constitution,  laws  have 
been  passed  to  carry  them  into  execution.  The  public  laws  of  nations 
declare  the  rights  and  penalties  of  war.  More  than  one  hundred  articles 
of  war  ha.ve.  been  adopted  by  Congress  for  the  government  of  our  army. 
At  tile  extra  session  in  July  last,  Congress  passed  various  laws  which 
were  then  deemed  'necessary'  to  crush,  out  the  rebellion.  Congress 
passed  those  laws,  and  the  President  executes  them,  in  accordance  with 
the  riglits  of  war. 

Among  the  rights  of  war  is  the  power  to  confiscate  the  enemy's  property 
and  liberate  their  slaves.  One  of  the  express  powers  conferred  on  Con 
gress  by  flie  Constitution,  is  to  call  out  the  militia  'to  suppress  insurrec- 


39 

tions,'  which  means  that  you  have  unlimited  power  to  effectually  suppress 
the  present  or  any  other  insurrection.  All  the  means  necessary  may  be 
employed  to  suppress  it.  Nothing  within  the  range  of  civilized  warfare 
is  withheld  from  you  in  this  crisis.  Congress  may,  in  the  language  of  the 
Constitution,  pass  '  all  laws  which  may  be  necessary  and  proper '  to  sup 
press  the  i insurrection.'  If  the  laws  now  on  the  statute-book  are  not 
sufficient,  it  is  our  duty  to  pass  other  and  more  stringent  laws,  confer 
more  power  on  the  President,  give  him  ample  power  to  make  our  success 
complete  and  certain.  Let  the  rebellion  be  terminated  in  the  shortest 
time,  and  with  the  least  possible  sacrifice  of  life  and  treasure.  The  con 
tinuance  of  the  war  is  extremely,  hard  and  exhausting  to  our  volunteer 
soldiers,  and  the  enormous  expenses  will  impose-heavy  burdens  upon  the 
people.  Every  consideration  of  patriotism  and  duty  requires  us  to  put 
into  active  exercise  at  once  all  the  means  within  our  reach  to  bring  the 
war  to  a  speedy  and  successful  termination. 

What  are  the  rights  of  war.  and  what  are  the  ordinary  means  which 
rnay  be  brought  against  these  rebels  to  weaken  their  power  and  crush  out 
the  rebellion  ?  As  enemies  de  facto  it  is  conceded  you  may  blockade  their 
ports,  preventing  all  exports  and  all  imports  or  supplies  from  abroad ;  you 
may  cut  off  all  internal  supplies  by  depriving  them  of  the  use  of  rail 
roads,  canals,  lakes,  rivers,  and  all  other  means  of  transportation;  you 
may  cut  off  all  communication  by  mail,  telegraph,  express,  or  otherwise ; 
you  may  capture  their  vessels,  their  supply  trains,  sink  their  ships,  destroy 
their  military  stores,  and  meet  them  face  to  face  in  battle,  and  kill,  cap 
ture  and  disperse  their  hostile  forces.  All  these  ordinary  means  have 
been  tried  during  the  last  year,  and  still  the  ring-leaders  who  fomented 
this  rebellion  are  more  desperate  than  ever.  •  War,  gigantic,  -unrelenting 
war,  still  goes  on.  The  rebels  are  more  determinedly  our  enemies  than 
ever  before,  and  a  call  is  made  by  the  President  for  more  troops  to  fight 
them.  In  this  state  of  things  what  is  to  be  done?  Are  there  no  other 
means  that  can  be  used  to  strengthen  ourselves  and  weaken  the  power  of 
the  rebels,  and  thereby  insure  their  defeat?  This  is  the  great  question* 
we  are  now  considering.  All  the  authorities  sustain  the  doctrine  that 
you  may,  under  the  war  power,' confiscate  the  property  of  enemies,  and 
may  liberate  their  slaves. 

On  the  power  of  liberating  slaves,  John  Quiricy  Adams  lays  down  the  ; 
doctrine  that,  in  time  of  war,  civil  or  foreign,  *  not  only  the  President  of 
the  United  States,  but  the  commander  of  an  army,  has  the  power  to  order 
the  universal  emancipation  of  the  slaves.'  It  is  evident,  however',  that  he 
regarded  it  as  a  power  subject  to  the  action  of  Congress.  With  a  call  to 
suppress  insurrection,  he  says,  '  comes  full  and  plenary  power  to  the  Sen 
ate  and  House  over  the  whole  subject.  It  is  a  war  power.'  *•• 

The  extreme  measures  of  confiscating  the  private  property  of  rebel?, 
and  the  liberation  of  their  slaves,  have  not  yet  been  tried  to  any  consider-'    ^ 
able  extent  during  the  war.    Is  it  a  war  measure  necessary  to  success  at  % 
fhistime?    If  it  is  necessary,  will  Congress  and  the  President1  have  the 
courage  and  the  firmness  to  exercise  this  power  boldly-?    Will-^Jhis  Gov-    ' 
ernment  strike  these  rebels  where  it  will,  do  them  the*most  tiarm?    Will      * 
you  take  from  them  their  property  and  liberate  their  slaves  ?    Will  yop.. 
deprive  them  of  the  most  effective  means  of  carrying  on  the  war?   ^Pake 
away  their  individual  property,  and  deprive  them  of  the  labor  and  ser 
vices  of  their  "slaves,  and  you  strike  a  blow  at  the  heart  of  the  rebellion.   • 
You  would  then  strike  directly  at  the  root  of  the  evil.    Give,a  death-blow* 
to  slavery,  and  you  would  soon  be  able  to  terminate  the  war. 


40 

We  have  already  taken  some  positive  steps  in  advance  on  the  slavery 
question  during  the  present  session.  Slavery  has  been  abolished  in  the 
District  of  Columbia.  The  capital  of  the  nation  is  forever  freed  from  the 
taint  of  involuntary  servitude.  We  have  passed  a  new  article  of  war, 
which  prohibits  commanders  of  divisions  from  returning  slaves  that  vol 
untarily  come  within  their  lines.  We  have  extended  the  ordinance  of 
1787,  prohibiting  slavery  in  all  the  Territories  of  the  United  States.  And 
we  have  passed  a  resolution  offering  pecuniary  aid  to  States  that  shall 
enter  upon  a  gradual  emancipation  of  the  slaves  within  their  limits. 
These  enactments  are  in  accordance  with  public  sentiment  and  the  pro 
gressive  spirit  of  the  age.  Shall  we  advance  still  further  in  the  work  of 
emancipation  ?  This  depends  somewhat  upon  the  necessity  of  such  a 
measure  and  the  probable  duration  of  the  war.  How  long  is  the  war  to 
continue  ?  No  man  here  is  wise  enough  to  determine  how  long  it  will 
continue,  nor  how  much  blood  and  treasure  will  be  expended  in  its  pros 
ecution.  The  Richmond  Enquirer  (official  organ  of  the  confederate 
administration)  uses  the  following  language,  evidently  by  authority : 

4  But  we  are  gratified  to  say  that  the  time  has  come  when,  for  the  future  at  least,  we  all  shall 
be  agreed.  All  voluntary  falling  back  has  ended,  and  the  fighting  hag  commenced.  What  the 
enemy  gains  henceforth  he  gains  by  the  bayonet.  What  we  can  win  from  him  we  will  have. 
We  will  break  his  colnmns,  and  pursue  him  into  his  own  country,  if  God  shall  prosper  our 
arms.  Strike!  strike  often,  strike  hard,  strike  at  every  opportunity— is  henceforth  the  rule. 
Vigilance,  activity,  enterprise,  daring,  are,  we  trust,  to  be  its  interpreter.' 

The  longer  the  war  continues,  the  more  desperate  will  it  become,  and 
the  more  certain  will  it  be  that  slavery  is  doomed.  The  advice  of  the 
Richmond  Enquirer  to  the  rebels,  to  "strike!  strike  often,  strike  hard,, 
strike  at  every  opportunity,"  shows  the  desperate  character  of  their  cause. 

Are  we  to  be  struck  often,  and  struck  hard  at  every  opportunity,  with 
out  giving  hard  blows  in  return  ?  I  trust  not.  War  means  to  strike  often 
and  strike  hard  on  both  sides.  "An  eye  for  an  eye,  and  a  tooth  for  a 
tooth."  War  teaches  us  to  use  all  the  means  within  our  power  to 
strengthen  ourselves  and  to  weaken  our  enemy.  Let  us  weaken  him  in 
every  possible  way  within  the  rules  of  civilized  warfare.  We  should 
strike  him  personally,  strip  him  of  his  property,  and  strike  the  shackles 
from  every  slave  that  by  his  labor  and  services  gives  him  support.  These 
are  the  rights  of  war,  and  I  am  prepared  to  see  them  fully  enforced. 

We  have  been  forced  by  rebels  into  this  unnatural  and  unnecessary  war. 
We  have  already  expended  over  six  hundred  millions  of  dollars  in  its  pros 
ecution  ;  besides,  what  is  of  far  greater  consequence,  many  thousands  of 
our  brave  soldiers  have  been  slain  on  the  field  of  battle,  and  have  died  by 
disease  brought  on  by  the  perils  and  hardships  of  the  campaign.  Is  all 
this  blood  and  treasure  to  be  expended  without  accomplishing  anything 
beneficial  to  the  nation,  to  civilization,  and  the  rights  of  man  ?  I  trust 
not.  We  now  want  and  must  have  a  final  settlement  of  this  whole  diffi 
culty.  Slavery  was  the  cause  of  this  gigantic  and  wicked  rebellion. 
Slavery  should  receive  its  doom,  thereby  removing  the  cause  of  future 
difficulty.  Rebels  have  fomented  and  brought  on  the  war,  and  their 
property  should  pay  a  large  share  of  the  expenses  incurred.  These  ques 
tions  must  now  be  met.  They  cannot  be  postponed.  The  laws  of  God 
and  man  require  us  to  vote  on  the  side  of  justice  and  humanity.  I  shall, 
under  the  circumstances,  vote  to  confiscate  the  property  of  leading  rebels, 
and  to  liberate  their  slaves. 


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